“I don’t want to be house poor.” We have all heard someone say that before. With the thought of brown bag lunches, missed opportunities with friends, and minimal vacations, many share the “I don’t want to be house poor” mentality.
Well, for that group, GOOD NEWS! With rising prices and conservative borrowing, homeowners are sitting on a record amount of potential cash. In other words, most homeowners are HOUSE-RICH!
According to CoreLogic, mortgage holders saw an increase in equity by 4.8% at the end of the second quarter. This 4.8% is a gain of nearly $428 billion.
Frank Nothaft, the chief economist for CoreLogic, explained, “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.”
How much equity is available to homeowners?
In August, it reached a record high of $6.3 trillion. This number is the share of equity available for homeowners with mortgages to borrow against while holing 20% equity in the home.
However, more are sitting on equity instead of borrowing against their homes.
Only $54 billion in equity was withdrawn in the first quarter of 2019. That number is the lowest it has been in the past for years. Equity withdrawn was less than 1% of the available amount.
Even though rates are at an all-time low, cash-out refinances are on the decline. Matt Weaver, VP of Sales at Cross Country Mortgage, believes “this decision-making is based on residual fear from the last real estate crash. Thes event has since shifted the perspective of many homeowners to now view home equity as a nest egg rather than a bank account.”
This rise has helped borrowers who were in a negative equity position. They no longer owe more than their homes worth.
There was a 7% decline in the number of mortgaged residential properties in a negative equity position. That is roughly 2 million homes.
Here’s to being house rich and not house poor! If you are thinking of capitalizing on your equity, reach out to us today to walk you through the process!
Pioneer Title Agency is a full service company with an operating philosophy of "Commitment to Service." The company provides title insurance, escrow, account servicing, trustee sales, as well as builder related trust services through more than 70 offices in Arizona.