Tag Archives: Home Equity

While the overall rise in equity marks another positive step forward for the housing market, it's undercut by the fact that nearly 9 million homes are "under-equitied," meaning the properties have less than 20 percent equity. Out of that group, 1.3 million have less than 5 percent equity, putting them just barely above water.

Looking ahead, things don't get much better, according to Black Knight Financial Services. Beyond the next three years, Black Knight Financial Services predicts still-high payment increases as the next phase of HELOCs resets. Borrowers with HELOCs scheduled to reset in 2019 are using an average of about 40 percent of their available credit and will incur payment increases of about $200 per month based on their current rates.

As of the end of 2013, CoreLogic estimates the number of mortgaged residential properties with equity totaled about 42.7 million, representing a share of about 86.7 percent. Due to a slowdown in the quarterly growth rate of the company's Home Price Index, the share of homes with equity versus underwater homes was mostly unchanged from Q3 to Q4.

Chief economist at CoreLogic, Mark Fleming, notes new factors affecting a homeowners ability to buy a home. The ability for a prospective buyer to purchase a home depends greatly on whether the buyer already owns a home, a report released Thursday notes. The market is being affected by the intersection of rising home prices, rising interest rates and stagnating incomes, which puts first-time buyers behind the curve that has benefitted them greatly since 2007.

With many older Americans feeling confident as their net worth rises with their home values, younger Americans who do not yet own a home find themselves in a very different situation, according to BBVA. "[Y]oung families will need to see faster income growth and save additional money to make a larger down payment," said economist Jason Frederick.