A sharp rise in home values last year gave homeowners a strong infusion of cash, in the form of home equity. It also helped more than half a million borrowers rise above water on their mortgages.
All real estate is, of course, local, and some homeowners saw significantly bigger gains than others, especially those in the Western region of the nation. Overall, however, they gained the most equity of any year since 2013.
Homeowners with a mortgage, representing about 63 percent of all properties, saw their equity increase 12 percent over the course of last year, according to CoreLogic. That comes to an average of $15,000 per homeowner and a collective gain of $908.4 billion.
Those calculations are based on the largest home price growth in four years. States like California and Washington saw even higher price growth, so homeowners in those states gained an average of $44,000 and $40,000, respectively. In Louisiana, homeowners saw no growth at all, and in Oklahoma, barely $2,000 in additional equity.
"Home-price growth has been the primary driver of home-equity wealth creation," said Frank Nothaft, chief economist at CoreLogic. "Because wealth gains spur additional consumer purchases, the rise in home-equity wealth during 2017 should add more than $50 billion to U.S. consumption spending over the next two to three years."
Borrowers with significant home equity often draw on that cash in the form of home equity lines of credit, or HELOCs. Originations of these second loans hit a nine-year high in the third quarter of last year but then fell suddenly, down 25 percent, according to Attom Data Solutions.
"We believe the uncertainty around tax reform at the end of the fourth quarter — including whether interest on home equity loans would be deductible — was enough to have a chilling effect on those originations in the fourth quarter," said Daren Blomquist, senior vice president at Attom.
Map of average year-over-year equity gain per borrower: