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Trillions in Equity Vanished from 3Q Housing Market

About $1.3T in recently added equity was lost, due to high mortgage rates and the economy; but U.S. housing equity remains strong compared to the pandemic’s outset.

NEW YORK – Black Knight’s latest mortgage monitor report found the U.S. housing market lost trillions of dollars in equity in the third quarter of 2022 due to high mortgage rates and economic turmoil. Yet the country’s housing equity position remains strong compared to the outset of the pandemic.

Some $1.3 trillion in recently added equity disappeared from the housing market, with equity among mortgaged homes plunging by about $1.5 trillion from its May peak while the average borrower’s equity decreased by about $30,000 from earlier this year.

Tappable equity reached an all-time record of $11.5 trillion in the second quarter; this fell by 10%, or $1.17 trillion, in the third quarter, “which may, along with rising rates, create headwinds for equity-related lending,” the report warned.

Still, home values in the 50 largest markets remain heightened by anywhere from 19% to 66% compared to the beginning of the pandemic.

Meanwhile, equity positions are $5 trillion, or 46%, above pre-pandemic levels, while the average mortgage holder is still up by more than $92,000 from the start of the pandemic.

“The vast majority of homes at risk of falling underwater are those that were purchased in 2022 and late 2021, at or near pandemic-era peak prices,” said Black Knight President Ben Graboske.

Source: HousingWire (11/07/22) Kim, Connie

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