Most of us gossip about other people’s wealth (and our own) by talking about whether stock prices or home prices are going up or down, right? It’s easy…we all know when our neighbor’s house sells or doesn’t and for how much and we all know when the stock price of Face Book or Apple goes up or down. Those values and those prices are public information.
Equity holdings, however, are not public. That financial information, like a bank account or a retirement fund, is intimate information and, in many ways, more indicative of a person’s or your financial well being.
Equity, specifically home equity, is the difference between the current market value of a home and the debt the owner of that home has against it. For example, a house currently valued at $400,000. with a mortgage debt of $150,000. would have equity of $250.000. for the owner.
According to ATTOM Data Solutions, a curator of the nation’s largest multi-sourced property data system, tells us in its latest quarterly report on home equity that 34% of all Americans have 100% of their equity in their properties and that one in four of us with a mortgage, some 14 million of us, are “equity rich.” In other words, 14 million Americans have debt on their homes that is less than 50% of the home’s current market value.
During the housing bust during the Great Recession, billions of equity dollars were lost. Today in Q2, 2017, many homeowners have recouped all or most of their debt and, according to Federal Reserve estimates, these homeowners control +$1.37T in equity wealth. The percentage of people who control this equity wealth…people who are “equity rich”…rose 22.1% from Q2, 2016.
As good if not better news, according to Federal Reserve estimates, the number of homeowners who are “seriously underwater,” homeowners whose debt on their homes, the loan to value ratio of (LTV), is at least 25% more than the estimated value on their home has dropped to 9.5% in Q2, 2017. This is a significant drop…in Q2, 2016 that percentage was 11.9% and today it is 9.5%. The foreclosure crisis is definitely not over…but…that crisis is better for 2.4% homeowners.
ATTOM Data Solutions points to two indicators concerning home equity increases; one is geography and one is ownership longevity. Properties owned for more than 20 years created equity rich situations for their respective owners. Where the properties are geographically distributed (listed below on this chart) is the other.
Go to this link for the chart I mention above.