A Post-Recovery First: Tappable Equity Declines

Total equity on mortgaged residential properties reached $9.8 trillion by the end of October, with $5.9 trillion of this sum being tappable, according to new data from Black Knight Inc.

 

However, the number of mortgaged homeowners with tappable equity is declining. A total of 43.6 million homeowners have tappable equity available, approximately 272,000 fewer than in the second quarter of this year, while the total level of tappable equity sank by $140 billion from one year ago. The average homeowner with at least 20 percent equity in their home has $136,000 in tappable equity available, which is roughly $2,300 less than in the second quarter, and Black Knight determined that softening home prices contributed to the decline of tappable equity in the third quarter within 60 of the nation’s 100 largest markets.

 

“That is the first decline we’ve seen since the housing recovery began, and its cause can be traced directly to softening home prices in some of the nation’s most expensive–and equity- rich–markets,” said Ben Graboske, Executive Vice President of Black Knight’s Data & Analytics division. “Three markets in California alone–San Jose, San Francisco and Los Angeles–accounted for 55 percent of the total net decline. Add Seattle into the mix, and you see that just four markets were behind two-thirds of the net reduction in tappable equity. All were areas where home price growth has far outpaced the national average in recent years, but in which prices fell in the third quarter of 2018–from as little as one percent in Los Angeles, to a 4.6 percent drop in San Jose.”

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