Top Markets for Equity Gains this Summer
By: Charles Sells
Although many housing markets are starting to feel the cooling effects of the post-pandemic interest-rate hikes and other housing slow-downs, most properties still have gained quite a bit of equity in the last 12 months. According to CoreLogic, although the rates of appreciation have slowed, there certainly has not been much value lost. In fact, almost two-thirds of all properties in the country saw increased equity in the first quarter of 2022 over Q1 2021. Cumulatively, this equates to an increase in equity of more than $3.8 trillion since January 2021.
Furthermore, the number of properties underwater has fallen dramatically since the start of 2021, CoreLogic analysts reported. In fact, negative equity fell 23 percent year-over-year between Q1 2021 and Q1 2022. CoreLogic’s Home Price Index Forecast also indicates that most homeowners can expect additional appreciation over the course of 2022 to the tune of just under 6 percent, but warns that if home prices fall by as little as 5 percent, about 167,000 homes currently “above water” will fall into negative equity. At present, the researchers wrote, “only 2 percent of homeowners with a mortgage remain underwater.”
Here are the top markets for annualized equity gains year-over-year at the end of Q1 2022:
- California (+$141,000)
- Hawaii (+$139,000)
- Washington (+$114,000)
- Arizona (+$96,000)
- Colorado/Utah (tied, +$92,000)
Investors should note that although no markets showed lower than double-digit appreciation in the CoreLogic study, there were three markets that did not have sufficient data for the research team to draw a conclusion. Those were South Dakota, Mississippi, and West Virginia.
With numbers like these, it is hard to believe that there could be a true housing slowdown in the coming months. However, warned Patrick Dodd, president and CEO of CoreLogic, “price growth is the key ingredient for the creation of home equity wealth.” He noted that the latest report tallies the “largest one-year gain in average home equity wealth for owners,” and predicted it would “spur a record amount of home-improvement spending this year.”
For investors hoping to find deals in the largely overheated national housing market, the key to generating leads in this economy will likely not be the ability to contact distressed homeowners but, instead, to identify individuals who may be feeling pressure due to rising interest rates, skyrocketing inflation, or the end of the pandemic foreclosure and eviction moratoriums. You can also work with investment firms that specialize in helping investors find homes off-market that may be converted into cash-flowing rentals or fix-and-flip properties.