Mortgage Watch | September 24, 2018

It pays to be a homeowner in much of the U.S. right now

If you’re a homeowner and live in certain parts of the country, your net worth just got larger. Why? Because right now it pays to own a home.

“Nationally, the average homeowner with a mortgage saw their equity shoot up by nearly $16,200 in the past year alone, according to a recent report by CoreLogic,” reports Claire Trapasso, senior news editor of realtor.com and an adjunct journalism professor at St. John’s University.

Comparing the second quarter of this year to the second quarter of the previous year, that’s a 12.3% annual increase of home prices across the country.

Trapasso goes on to quote CoreLogic’s chief economist Frank Nothaft: ”It’s good news if you’re an existing homeowner. … You can certainly use that additional wealth as collateral you could borrow against if you’re looking to make some home improvements.”

Left coasters accrued even more equity, with Californians gaining an average of $48,800 in just one year. If you think about it, that’s more than many folks earn in a year and all these homeowners had to do was make their mortgage payments and pay their taxes.

The Realtor.com article goes on to quote a San Francisco Bay Area market analyst as saying, ”The first half of 2018 was probably the most ferocious market since the year 2000 in terms of buyer demand, competition between buyers, and overbidding. In the Bay Area, we saw some huge jumps in median sale prices. It’s crazy.”

These huge equity gains could slow down or reverse themselves, however, with inventories expected to rise soon. If buyers have more to choose from, prices are less likely to be driven up by bidding wars. There is, after all a limit on what people can afford to pay for a home.

According to the article, California’s gains were followed by Washington, where average home equity was up $41,100; Nevada, at $32,193; Hawaii, at $29,565; and Massachusetts, at $23,527.

States experiencing a loss in equity include Louisiana, Connecticut, and North Dakota, but in less than $1K amounts.

Rates Currently Trending: Neutral

Mortgage rates are trending sideways to slightly higher so far this morning. Last week the MBS market worsened by -17bps. This was enough to move rates slightly higher last week. There was moderate mortgage rate volatility last week.

About the Author

Tim Morissette, also known in the community as Mr. Foothill Ranch, offers over 43 years of real estate experience which has given him an established reputation and unmatched market knowledge. He is joined by his wife, Michele and son Matt, as they continue to offer personal service with an emphasis on achieving his clients’ real estate goals.  This unique combination of traits has led to his proven track record of referral and repeat business. This can be witnessed by the trust of homeowners in Foothill Ranch where he has sold twice as many homes and represented three times more buyers than the next-leading real estate agent for the last 23 years.

As residents of Foothill Ranch since 1994, Tim and Michele are actively involved in the community by fundraising for Foothill Ranch Library, Make-a-Wish Foundation, Cancer Society, Homes for Habitat, Relay for Life, South County Outreach, and the local church and schools. Tim enjoys sponsoring community-wide garage sales, as well as sponsors Paper Shredding and E-Waste Recycling events twice a year.

Tim and Michele are dedicated to their family of four sons, daughter-in-laws, and grandchildren. As a family, they enjoy many outdoor activities which include camping, spearfishing, mountain climbing and exploring the miles of hiking and equestrian trails in Foothill Ranch and the Whiting Ranch Wilderness Park. Tim and his sons are also avid snowboarders and enjoy mountain biking and lobster diving. Family is a top priority in the Morissette household. They look forward to helping more families achieve their dreams of homeownership.