Why Home Equity Is a Bright Spark in the Housing Market

By
Real Estate Agent with Chapman Hall Premier Realtors

Given how we have seen more unemployment claims than ever before over the past several weeks, fear is spreading widely. Some good news, however, shows that more than 4 million initial unemployment filers have likely already found a new job, especially as industries such as health care, food and grocery stores, retail, delivery, and more increase their employment opportunities. Breaking down what unemployment means for homeownership, and understanding the significant equity Americans hold today, are important parts of seeing the picture clearly when sorting through this uncertainty.

One of the biggest questions right now is whether this historic unemployment rate will initiate a new surge of foreclosures in the market. It’s a very real fear. Despite the staggering number of claims, there are actually many reasons why we won’t see a significant number of foreclosures like we did during the housing crash twelve years ago. The amount of equity homeowners have today is a leading differentiator in the current market.

Today, according to John Burns Consulting, 58.7% of homes in the U.S. have at least 60% equity. That number is drastically different than it was in 2008 when the housing bubble burst. The last recession was painful, and when prices dipped, many found themselves owing more on their mortgage than what their homes were worth. Homeowners simply walked away at that point. Now, 42.1% of all homes in this country are mortgage-free, meaning they’re owned free and clear. Those homes are not at risk for foreclosure (see graph below): Why Home Equity is a Bright Spark in the Housing Market | Keeping Current MattersIn addition, CoreLogic notes the average equity mortgaged homes have today is $177,000. That’s a significant amount that homeowners won’t be stepping away from, even in today’s economy (see chart below):Why Home Equity is a Bright Spark in the Housing Market | Keeping Current MattersIn essence, the amount of equity homeowners have today positions them to be in a much better place than they were in 2008.

Bottom Line 

The fear and uncertainty we feel right now are very real, and this is not going to be easy. We can, however, see strength in our current market through homeowner equity that was not been there in the past. That may be a bright spark to help us make it through.

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
Real Estate General Information
Location:
Georgia

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Rainmaker
1,824,511
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

this is an important message to share with everyone - we are not as bad off as people fear

May 08, 2020 08:29 AM #1
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
205,821

TIM GRISSETT

Ask me a question
*
*
*
*
Spam prevention