US Homeowners See First Home Equity Losses Since 2012
The home equity losses are here.
US homeowners with mortgages (around two-thirds) suffered more than $108 billion in collective losses in Q1 compared to the same period a year ago, according to CoreLogic figures released on Thursday.
That sounds like a lot, but it's actually a drop in the proverbial bucket. It works out to just $5,400 per borrower, and the worst of the declines were concentrated in Western states, where annual losses were quite large.
Of course, long-time homeowners in some
Remember the story, money isn’t real, investments aren’t real unless we all believe the story. An extra 100k can be borrowed against the imputed equity right now, but only at a rate probably higher than the rate on our collective first mortgages. Also, if we want to spend our equity we have to find a bank willing to lend to us. This could be a bit dicey until someone tells banks what the new capital requirements are going to be. Wells has already announced no new mortgage loans except to existing customers.
There are a LOT of younger Millennials and Gen Zers- who are currently in the age range of 25-30 who are not even trying to save for a down payment on a home. Up until the past few years, this was a primary goal of many people in that age range.
Now, due to the crazy high cost of homes, the people in the 25-30 age group are going out to bars and restaurants instead of staying home and saving for a down payment.
Have you been out on the town lately? Bars and restaurants are quite busy where I am.
Count me among those who bought a home out west in March of last year. Our house is undoubtedly worth less than what we paid, but to your point, we locked in our mortgage just as rates were beginning their ascent. Frankly, I’d prefer prices remain flat or down as we’ll likely upgrade in the next 5 to 10 years as our kids get older and we need more space. We’ll likely hold onto our existing home as a rental property, so the price fluctuations don’t mean much to us at this point.
I am curious what will happen to Bay Area prices as more companies start pushing for a return to office and a bunch of new generative AI companies start springing up. As nice as remote work is (and I am currently remote myself), it’s still better career-wise to be where the action is and the Bay Area is still by far the best place to be in tech.
The Fed gave and gave and now they’re taking and probably will continue with higher rates as the party is definitely not over yet.