CoreLogic® (NYSE: CLGX), a leading global property information, analytics and data-enabled solutions provider, recently released its special report evaluating “The Role of Housing in the Longest Economic Expansion.” This year, the report analyzes the U.S. housing market’s impact on the latest 121-month economic expansion – the longest in the nation’s history.
The report examines the housing economy and looks at the growth of gross domestic product (GDP), unemployment rates and housing activity from June 2009 through July 2019.
- The percent of homes with negative equity went from 25.9% in the first quarter of 2010 to 4.1% in the first quarter of 2019.
- Total home equity hit a record of $15.8 trillion at the end of the first quarter of 2019, up from $6.1 trillion in the first quarter of 2009. Between the first quarter of 2010 and the first quarter of 2019, the average equity per borrower increased from approximately $75,000 to approximately $171,000.
- Since 2010, the housing flip rate has increased significantly. In the first quarter of 2018, the number of properties bought and sold again within a two-year period reached its highest point at 11.4%.
- Since June 2009, home prices and rents have continued to grow. Through May 2019, home prices increased a cumulative 50% and single-family rents increased 33% in the United States.
Rising employment rates typically have a positive impact on the housing economy as it can lead to an increase in potential home buyers and a decrease in negative equity (often referred to as being underwater or upside down, meaning borrowers owe more on their mortgages than their homes are worth). In the first quarter of 2010, 25.9% of the total number of mortgaged residential properties in the United States were in negative equity. As the market has improved over the past decade, this share dropped to 4.1% in the first quarter of 2019 (Table 1). A strong economy and an increase in total home equity helped to reduce the negative equity share. Total home equity reached a record of $15.8 trillion at the end of the first quarter of 2019, up from $6.1 trillion in the first quarter of 2009.
“During the last nine years, the expansion has created more than 20 million jobs, raised family incomes and rebuilt consumer confidence,” said Frank Nothaft, chief economist at CoreLogic. “The longest stretch of mortgage rates below 5% in more than 60 years has supplemented these factors. These economic forces have driven a recovery in home sales, construction, prices and home equity wealth.”
Housing has long been associated with wealth creation in the United States. Home flipping, or the act of buying a property with the intent to sell it quickly for a profit, is a tactic that some homeowners use to generate profit. Since the last recession, the flipping rate has increased significantly: the two-year flip rate reached its highest point in the first quarter of 2018 at 11.4%, up from its lowest level (4.9%) in the third quarter of 2010. (Figure 4)