American homeowners have an estimated record high of $11 trillion in tappable equity. This number represents a year-over-year increase of 8.6%, which is the largest jump seen since 2006. While this figure is impressive, the financial technology firm also noted that not all homeowners are taking advantage of their equity. Specifically, only 17% of properties nationwide are currently utilizing home equity in some fashion.
The report further revealed that the amount of tappable equity available to homeowners appears to be concentrated in more high-end neighborhoods, with only 6.7 million borrowers in the GSE conforming loan market currently having access to $5.8 trillion in tappable equity. On the other hand, almost three times as many borrowers in the non-conforming market hold $5.2 trillion in tappable equity, despite representing only 39% of all mortgaged properties.
Black Knight's data implies that the higher concentration of tappable equity among more affluent households could be due in part to rising home values. Currently, the average property has seen a 7.6% value increase over the last 12 months, creating more tappable equity for those homeowners who are able to take advantage of it. Moreover, low interest rates have also allowed borrowers to access larger amounts of equity without significant increases in their monthly payments.
From a regional perspective, homeowners in the West region have held the largest share of tappable equity for several years, with $3.55 trillion as of February 2019. Other regions including the Northeast, Midwest, and South had $2.05 trillion, $2.37 trillion, and $2.54 trillion respectively. These figures are indicative of the fact that home values have been constantly increasing across the country, making mortgages more attractive and providing individuals with greater opportunities to tap into their equity.
Overall, Black Knight's report demonstrates the potential for homeowners to utilize their increasing tappable equity to access funds for various purposes. Despite the fact that only 17% of individuals are taking advantage of this asset, there is a large amount of potential available for those willing to explore it. Although the concentration of tappable equity may be most appealing to higher end households, the same opportunities exist for all homeowners, regardless of their income level or regional location. By understanding their financial standing as well as their potential for drawing on tappable equity, individuals are better positioned to make informed decisions about their finances in the long run.
This article was contributed on Jul 04, 2023
