On The Market

176: With Home Equity at an All-Time High, Will Homeowners “Lock-In” Even More? w/Molly Boesel

Jan 8, 2024

Molly Boesel, Principal Economist at CoreLogic, discusses the high level of home equity in America and its impact on the housing market. Topics include the rise of accidental investors, the reluctance of homeowners to sell, and the potential effects on housing supply and prices. The chapter also explores the combination of high equity and low mortgage rates, as well as factors influencing equity growth.

28:38

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Molly Boesel

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Quick takeaways

High levels of homeowner equity are keeping housing supply locked up and contributing to a decrease in housing inventory, potentially causing prices to rise in certain areas.

The decline of negative equity in the housing market provides homeowners with stability, protection against foreclosure, and the ability to sell their homes to pay off mortgages and build wealth.

Deep dives

The Impact of Home Equity on the Housing Market

The podcast episode discusses the Home Owner Equity Insight report by CoreLogic, which highlights the significant amount of wealth Americans are holding in their homes. The report shows that homeowners have built up substantial equity, with the average borrower having $304,000 in home equity. This high level of equity provides homeowners with a considerable cushion against potential foreclosures and financial crises. Additionally, the episode mentions that the combination of high homeowner equity and low mortgage rates is impacting the housing market by encouraging homeowners to stay in their homes and renovate rather than move. This has led to a decrease in housing supply, which can drive up prices in certain areas. The episode also touches on the challenges faced by those looking to enter the housing market due to high prices and mortgage rates, but expresses optimism that mortgage rates will eventually decrease, providing more affordability for potential buyers.

Introduction

3min

The Renter Nation and Homeownership

6min

High Mortgage Rates, Fundrise's Private Credit Strategy, and the Role of Home Equity

5min

Impact of High Homeowner Equity and Low Mortgage Rates

13min

Factors Influencing Equity Growth and Accessing Reports

4min

Home equity just hit an all-time high for Americans. And while this is great for homeowners, what effects could this have on the housing market? Will house hoarding become a new trend as homeowners “lock in” with their rock-bottom mortgage rates? Will those who are equity-rich take their profits and move to cheaper markets, causing prices to skyrocket as they bid higher than local buyers can? Molly Boesel, Principal Economist at CoreLogic, is on to answer these questions and more!

CoreLogic’s latest Homeowner Equity Insights report has a clear takeaway: Americans are equity rich—really equity rich. On average, American homeowners have hundreds of thousands of dollars sitting in home equity, with some of the priciest housing markets having millions! This is causing a new type of investor, the “accidental investor,” that could keep housing supply locked up.

Molly gives her take on why so many homeowners are refusing to sell, whether or not mortgage rates will fall substantially next year, when refinancing will finally start to rise again, and if foreclosure risk is even a relevant worry in today’s rock-solid economy.

In This Episode We Cover:

Latest homeowner equity numbers that put owners and sellers in an even better position

The most and least home-equity-rich housing markets in America

Foreclosure risk and how “negative equity” completely flipped since the Great Recession

The rise of “accidental investors” who are keeping more housing supply to themselves

Molly’s strong mortgage rate prediction and where she thinks rates will be by the end of this year

Whether or not equity could explode once again as buyers get back into the market

And So Much More!

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