Homeowner “tappable” equity reached a new high as of the end of the second quarter, surpassing $6 trillion for the first time in history, according to Black Knight’s Mortgage Monitor report.
Tappable equity grew by $256 billion during the second quarter and by $636 billion during the first half, according to Black Knight’s data.
There is now nearly three times as much tappable equity available than at the bottom of the market in 2012.
Ben Graboske, executive vice president of Black Knight’s data and analytics division, says “some 44 million homeowners now have equity that could be tapped via cash-out refinances or home equity lines of credit.”
However, as home price appreciation slows, the amount of tappable equity may soon hit a plateau.
Black Knight’s data shows that there was a noticeable slowing in equity growth in the second quarter compared with the first quarter, largely due to slowing home price growth in some of the nation’s most equity-rich locations and price segments.
“Although total available equity broke an all-time record, we observed strong and unseasonable quarterly slowing in equity growth,” Graboske says in a statement. “Although the $256 billion increase in tappable equity [in the second quarter] was the fourth strongest quarterly growth since the housing recovery began, the decline from [the first quarter’s] $381 billion was significant, particularly given that historically, [the first two quarters] are responsible for the bulk of equity growth in any given year.”
Graboske further adds that the 2.7% gain in home prices seen during the second quarter was the lowest in five years.
“This is made all the more notable by the fact that the second quarter has historically been the strongest quarter for home price gains,” he says. “Drilling down to a more localized geographic level, we see significant pullback in the rate of home price appreciation in the nation’s 10 most equity-rich markets. This, in turn, pushed down overall equity growth nationwide.
“All in all, these markets accounted for over 60 percent of tappable equity growth in the first quarter, but due to slowing home price gains, that share fell to just 33 percent in the second quarter,” Graboske says. “Results for California stand out: whereas home price gains nationally were higher in the second quarter than the first quarter, in California, the average home price gain was down 43 percent. In the most expensive areas of the state, average price gains saw an incredible 80 percent quarterly decline.”
Black Knight’s data also suggests that rising interest rates are having some impact on home equity utilization.
