Homeowner equity on the rise

By U.S. EconomyFOXBusiness

Millions of homeowners ready to tap home equity to pay bills: study

Ramsey Solutions financial expert Chris Hogan discusses the new survey from Bankrate.com, which shows that homeowners think it’s a good idea to tap into the value of their homes to pay bills and the best time for millennials to buy a house.

As U.S. household wealth rises to record levels, property owners are enjoying a bump in home equity to go along with it.

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According to a recent study from CoreLogic, U.S. homeowners with mortgages saw equity increase last quarter by more than 12 percent, or $981 billion, year-over-year. Meanwhile, the number of houses with negative equity – when the amount an owner owes on a property exceeds its market value – fell by 20 percent during the second quarter from the year prior, to 2.2 million homes. During the fourth quarter of 2009, during the peak of the housing crisis, 26 percent of mortgaged homes had negative equity.

California saw the largest rise in homeowner equity, at an average of $48,000 compared to the same quarter last year. Washington followed closely with a more than $41,000 average increase. Three states, Connecticut, Louisiana and North Dakota, saw home equity decrease year-over-year.

The average homeowner gained $16,200 in home equity wealth during the quarter.

Meanwhile, the Federal Reserve said on Thursday that household wealth rose more than 2 percent quarter-over-quarter to $106.9 trillion. While Americans’ investment portfolios grew by $800 billion in the second quarter, home values increased by $600 billion.

Home prices have also been lifted by a persistent supply shortage in the housing market. Construction has continued to trail demand due to a lack of construction workers, burdensome regulation and tariffs on materials.