The white-hot US housing market has brought its fair share of troubles. Soaring prices have slashed affordability, and the countryThose who own homes are using the strong market to take cash out of their properties — but that brings risks in its own right.
Broadly, owners now hold a record $9.1 trillion in home equity, according to the report. The average mortgage holder has $173,000 in tappable equity, up $20,000 from the end of the first quarter. By tapping into their home equity, Americans are using their homes as pseudo credit cards while relying on property values to keep climbing. When similar behavior happened almost 15 years ago, the whole financial system had to be bailed out, setting in motion a decade of slow growth and possibly a permanent disfigurement of the economy.For now, data suggest today's market rests on much sturdier foundations than in 2007.
"A rising tide lifts all boats as they say, including homeowners in forbearance — whose ability to return to making payments when forbearance ends will likely be a key driver in the nation's overall COVID-19 economic recovery," Ben Graboske, data and analytics president at Black Knight, said in the report.
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