Black Knight reveals first national decline since housing recovery began
Tappable equity fell in the third quarter of 2018 with softening house prices promoting a decline in 60 of the 100 largest US metros.
The total equity on mortgaged properties now stands at $9.8 trillion, $5.9 trillion of which is tappable according to data from Black Knight Inc.
The firm’s Mortgage Monitor Report shows that tappable equity (the among available for homeowners with a mortgage before hitting 80% LTV) fell by $140 billion in Q3 2018.
The average homeowner with a mortgage lost $2,300 in tappable equity and 272,000 owners slipped out of tappable equity altogether.
“That is the first decline we’ve seen since the housing recovery began, and its cause can be traced directly to softening home prices in some of the nation’s most expensive – and equity- rich – markets,” explains Ben Graboske, executive vice president of Black Knight’s Data & Analytics division.
The Q3 decline in tappable equity erased more than 20% of the growth seen over the first 6 months of the year.
More than half of the total net decline was due to three markets in California; San Jose, San Francisco, and Los Angeles. Adding Seattle totals two-thirds of the net reduction in tappable equity.
What connects these four areas is home price growth that has far outpaced the national average in recent years, but where prices fell in the third quarter.
Affordability concerns are eating into equity
There are some positive notes; tappable equity, although down quarter-over-quarter in 60 of the top 100 markets, is up in 98 of the top 100 year-over-year. And Q3 home prices are generally flat.
But Graboske highlights how affordability concerns are impacting homeowners’ tappable equity as prices weaken, especially in more expensive metros.
The data shows that the average homeowner with a mortgage has $191,000 in equity in his or her home, while those in negative equity make up just 1.8% of all homes with a mortgage. Among those with tappable equity, the average amount available to borrow against is $136,000.
