Rising Home Equity For American Homeowners
Equity rich may not be a phrase you're familiar with but it refers to homeowners whose loan-to-value ratio is 50 percent or lower – meaning homeowners whose mortgage is less than half of their home's appraised value.
Simply put, a homeowner's loan-to-value ratio refers to the amount of their home's value that is borrowed. For example, if you were buying a house valued at $100,000 but only borrowing $50,000 to purchase it, your loan-to-value ratio would be 50 percent. Naturally, the lower a homeowner's ratio, the more home equity that homeowner has. A recent report from ATTOM Data Solutions looked at homeowners across the country and found 23.4 percent of all homeowners with a mortgage were equity rich, an increase of more than 2.6 million from the same time last year.
Daren Blomquist, senior vice president at ATTOM, says the combination of people living in one place for longer periods and continued home price increases have led to the improvement. “Median home prices increased on a year-over-year basis for the 18th consecutive quarter in Q3 2016, and homeowners who sold in the third quarter had owned their home an average of 7.94 years – a new high in our data and substantially higher than the average homeownership tenure of 4.26 years pre-recession,” Blomquist said.