With prices still seeing strong gain, collective equity reaches new all-time high

Tappable equity attains new peak, too, according to ICE

According to the latest Mortgage Monitor Report from Intercontinental Exchange (ICE), homeowners are still benefiting greatly from historically strong price growth via big improvements to their equity.

March marked the third straight month with an above-average monthly pick-up in home prices, per the ICE Home Price Index. The annual rate of price increase was 5.6% in March, down from 6.0% in February. Taking seasonality into account, prices were up 0.42% month over month in March, a step back from 0.58% one month prior. Without seasonal adjustment, though, prices were up 1.2% from February to March — more than 25% above the 25-year average gain of 0.96% during the same time period.

Because of the strong uptick in prices, homeowners with mortgages ended the first quarter of this year with just under $17 trillion collectively in home equity, a new all-time record. Some $11 trillion of that is tappable, which ICE defines as equity available to leverage while keeping a 20% equity cushion.

Put another way, that’s about $206,000 in tappable equity per homeowner.

“Such strong price gains continue to plague would-be homebuyers in today’s higher-rate environment, but for existing homeowners the picture keeps growing brighter,” said Andy Walden, ICE’s vice president of enterprise research strategy.

Almost a quarter of all that tappable equity is concentrated within just five metros on the West Coast: Los Angeles, San Francisco San Jose, San Diego and Seattle.

 “Not only do these borrowers hold a cumulative $2.7 trillion in tappable equity, but they also tend to have first lien interest rates well below the national average due to more frequent refinance activity among high-balance loans,” explained Walden. “The same holds true in other metropolitan areas such as New York and Washington, D.C., which account for another $1.1T trillion in tappable equity. For folks like these, second lien equity products remain a particularly attractive option for tapping significant amounts of housing wealth without sacrificing a once-in-a-lifetime low rate on their existing mortgage.”

Unfortunately, while strong price growth remains a boon for existing homeowners, it’s also still a barrier to would-be buyers.

“The recent trend of rising interest rates has dampened homebuyer demand and allowed the inventory of homes for sale to improve,” said Walden. “We’re still very much in a hole from an inventory perspective, but that deficit has fallen from 50% a year ago to 38% in March.”

ICE data currently shows 3.3 months of inventory at the current sales pace — much improved, as Walden noted, though still a historically low level of supply.


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