At the end of Q2 2019, mortgage holders saw an annual increase of +4.8% in their home equity. Collectively, home equity reached $428B, according to CoreLogic. Individual mortgage holders gained some $4,900 in one year.
Conversely, mortgage holders in negative equity positions dropped by nearly -7% to two million homes or 3.87% of all mortgaged properties between Q1 – Q2 2019. This 3.87% of negative equity holders on mortgaged properties is an historic low, also according to CoreLogic.
CoreLogic’s chief economist, Frank Nothaft, said, “Borrower equity rose to an all-time high in the first half of 2019 and has more than doubled since the housing recovery started. Combined with low mortgage rates, this rise in home equity supports spending on home improvements and may help improve balance sheets of households who could take out home equity loans to consolidate their debt.”
According to Black Knight’s August 2019 report, $6.3T is the amount of equity available to mortgage holders.
Mortgage holders, however, withdrew only $54B, or less than 1% of equity, of that record-high $6.3T amount in Q1 2019. Additionally, cash-out refinance withdrawals also fell in Q1 from Q4”s $27.9B top $27.3B.
Why are homeowners with mortgages being so penurious? Matt Weave, vice president of sales with CrossCountry Mortgage in Florida, believes, “Rates are once again at another all-time low and, interestingly enough, most homeowners are not taking advantage of the opportunity to inexpensively tap into their homes’ equity. My observation has been that the driving force behind this decision-making is based on residual fear from the last real estate crash. This event has since shifted the perspective of many homeowners to now view home equity as a nest egg rather than a bank account.”
Despite this huge sum of money on a national scale, remember that all aspects of real estate are local including home equity. Look at some of these comparisons:
- Idaho mortgage holders saw an increase of $22,100 annually.
- Wyoming mortgage holders saw an increase of $20,400 in home equity in one year.
- Nevada mortgage holders saw an increase of $16,800.
- California, Washington state and Louisiana saw only minimal gains.
- Connecticut and North Dakota mortgage holders actually lost home equity in this one year.
Thanks to CNBC’s Diana Ollick for source data.
Also read: https://timandjulieharris.com/2019/10/01/how-telecommuting-is-changing-real-estate.html, https://timandjulieharris.com/2019/09/23/essentials-for-success-in-luxury-markets.html, https://timandjulieharris.com/2019/09/24/four-reasons-to-buy-before-2020.html