Homeowners in the U.S. have accumulated unprecedented housing wealth, with a total equity of $17.9 trillion, averaging $310,000 per homeowner. Despite a nearly 20% increase in the origination of second mortgages and home equity lines of credit (HELOCs) in the second quarter, this only accounts for less than 0.1% of the tappable equity available.
Thom Malone, a principal economist at Cotality, notes that those with the most equity are often reluctant to tap into it due to favorable mortgage rates and strong cash flow. Many homeowners secured low mortgage rates during the Covid pandemic, making them hesitant to take on new debt at higher current rates. This trend is compounded by consumer anxiety regarding the economy and interest rates.
While equity levels are significantly higher in states like Hawaii and California, some regions are experiencing declines in home values, leading to a widening disparity in equity across the country. The overall share of underwater mortgages remains low at 2.1%, indicating that most homeowners are not in immediate financial distress