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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 60 April 2024 J O U R N A L NUMBER OF UNDERWATER U.S. HOMES FALLS YOY C oreLogic's latest Homeowner Equity Report (HER) for Q4 2023 shows that U.S. homeowners with mortgages (which account for roughly 62% of all properties) saw home equity increase by 8.6% year over year, representing a col- lective gain of $1.3 trillion and an average increase of slightly more than $24,000 per borrower since Q4 of 2022. This brought total net homeowner equity to more than $16.6 billion at the end of 2023. Home equity gains continued in Q4, providing owners with a solid financial cushion, particularly for baby boomers who have been in their homes for a while and have accumulated substantial equity. Three Northeastern states posted the country's highest annual equity gains in Q4: » Rhode Island ($62,000) » New Jersey ($55,000) » Massachusetts ($53,000) The equity growth in those states was due in part to the recent healthy home price increases in that area of the coun- try. According to CoreLogic's latest Home Price Insights report, Rhode Island and New Jersey led the nation for year-over- year appreciation in January, a respective 13.2% and 11.6%. "Rising home prices continue to fuel Default Servicing growing home equity, which, at $298,000 per average borrower remained near historic highs at the end of 2023," said Dr. Selma Hepp, Chief Economist for Core- Logic. "By extension, at 43%, the average loan-to-value ratio of U.S. borrowers has also remained in line with record lows, which suggests that the typical home- owner has notable home equity reserves that can be tapped if needed. Where Are the Underwater Homes? Negative equity—also referred to as underwater or upside-down mortgag- es—applies to borrowers who owe more on their mortgages than their homes are currently worth. As of Q4 2023, the quarterly and annual changes in negative equity were: » Quarterly change: From Q3 2023 to Q4 2023, the total number of mort- gaged homes in negative equity de- creased by 1.1%, to one million homes or 1.8% of all mortgaged properties. » Annual change: From Q4 2022 to Q4 2023, the total number of homes in negative equity decreased by 15%, from 1.2 million homes or 2.1% of all mortgaged properties. "More importantly, home price growth over the last year has helped lift the equity of homeowners who were underwater because of 2022 price declines—meaning that their mortgage amount was higher than the value of