U.S. Home Equity Increases in Q2 2022, With Total Average Equity Per Homeowner Reaching $300,000

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CoreLogic released its Q2 2022 Homeowner Equity Report This Week in Real Estate showing a collective gain of $3.6 trillion or 27.8% equity increase since the second quarter of 2021. As we transition to the fall selling season perspective is critical. Volume of sales are down, yes. Home price appreciation is decelerating, yes. Mortgage rates are higher, yes. However, each of those metrics are compared to historic levels, so declining percentage changes should be expected, not to mention a decade long market cycle that was on borrowed time for a reset. Home prices are 43% higher than they were in early 2020 according to the S&P Case-Shiller Home Price Index and active inventory is still 43% lower than it was in 2019. While current affordability is a barrier to some, for other potential buyers they have more options to choose from allowing them to be more methodical and are taking advantage of a more balanced negotiating environment. Below are a few newsworthy events from the first week of September that influence our business: 

U.S. Home Equity Increases Again in Q2 2022, With Total Average Equity Per Homeowner Reaching a Record High of $300,000. CoreLogic released its Homeowner Equity Report for the second quarter of 2022 on Thursday, showing U.S. homeowners with mortgages (which account for roughly 63% of all properties) saw equity increase by 27.8% year-over-year, representing a collective gain of $3.6 trillion, for an average of $60,200 per borrower, since the second quarter of 2021. Although U.S. home price growth slowed on an annual basis in the second quarter of 2022, homeowners continued to gain near-record equity from the second quarter of 2021. The total average equity per borrower has now reached almost $300,000, the highest in the data series. Home price growth and the refinance boom of the last two years have helped bring down the national average loan-to-value ratio to 42%, the lowest in the data series since 2010. The average year-over-year equity gain per borrower in Oregon and Washington is $54,000 and $82,000, respectively.  

The Fall Housing Market Takes a Miraculous Turn Where Buyers and Sellers Can Gain Big – If They Know What To Do. First, the good news for buyers is that fall is typically the best time to buy a home – and this autumn is shaping up to be better than usual with a bumper crop of homes on the market with a longer shelf life than they’ve had in the past. “For today’s home shoppers, there are more homes available for sale, and there may be more time to make an offer on one,” notes Realtor.com Chief Economist Danielle Hale in her analysis.  Meanwhile, the good news for home sellers is there appears to be “a renewed recognition of the relative advantages today’s sellers have,” Hale continues. Namely, record-high home equity, thanks to skyrocketing home prices. For the week ending September 3, listing prices rose by 13.4% over the same week last year. “The typical asking price of homes was up from last year by double digits for a 38th week,” says Hale. For the week ending September. 3, the number of new home sellers entering the market dropped by 6% year over year. “This week marks the ninth straight week of year-over-year declines in the number of new listings coming up for sale,” says Hale. For the week ending September 3, properties spent five extra days on the market compared with a year earlier. “For a sixth straight week, homes are sitting on the market for a longer time than last year,” says Hale.

Confused About The Housing Market? Here’s What’s Happening Now – And What Could Happen Next. The main driver of the slowdown is rising mortgage rates. The average rate on the 30-year fixed mortgage, which is by far the most popular product today, accounting for more than 90% of all mortgage applications, started this year right around 3%. It is now just above 6%. The other drivers of the slowdown are high prices and low supply. Prices are now 43% higher than they were at the start of the coronavirus pandemic, according to the S&P Case-Shiller national home price index. The supply of homes for sale is growing, up 27% at the start of September compared with the same time a year ago, according to Realtor.com. While that comparison seems large, it’s still not enough to offset the years-long shortage of homes for sale. Active inventory is still 43% lower than it was in 2019. 

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