Real estate agents arrive at a brokers tour showing a house for sale in San Rafael, California.Getty Images
National home prices rose 3.7% annually in March, down from 3.9% in February, according to the S&P CoreLogic Case-Shiller home price index.
Prices had been seeing double-digit annual gains, but they are gone. The largest annual gain was 8.2% in Las Vegas; one year ago, Seattle had a 13% gain a year ago but has dropped dramatically to just 1.6%. The 20-City Composite dropped from 6.7% to 2.7% annual gains over the last year.
“Given the broader economic picture, housing should be doing better,” David Blitzer, managing director and Chairman of the Index Committee at S&P Dow Jones Indices, wrote in the report. He noted that mortgage rates and unemployment were low, along with low inflation and moderate increases in real incomes.
“Measures of household debt service do not reveal any problems and consumer sentiment surveys are upbeat. The difficulty facing housing may be too-high price increases,” he added.
The 10-City Composite rose 2.3% annually, down from 2.5% in the previous month. The 20-City Composite gained 2.7%, down from 3.0% in the previous month.
Even with today’s smaller gains, prices are still rising almost twice as fast as inflation. In the last 12 months, the S&P Corelogic Case-Shiller National Index is up 3.7%, double the 1.9% inflation rate.
Prices are still higher annually in all of the 20 major cities measured by the indices, but some are getting very close to negative territory. Prices in Los Angeles, Seattle, Chicago, San Diego and San Francisco are just over 1% higher than March 2018.
Las Vegas, Tampa and Phoenix are seeing the biggest gains. These were the markets hit hardest during the housing crash and therefore still have the farthest to go to fully recover.
Other housing indicators are also weaker than expected this year. Existing home sales have been relatively flat all spring, despite falling mortgage rates.
220 Central Park South. Image via Vornado Realty Trust and Robert A.M. Stern Architects.
New York’s 2020 budget was revealed this weekend; among many other items, the proposed “pied-à-terre tax” went away, but a progressive “mansion tax,”–a one-time tax on properties valued from $1 million to $25 million or more–and an attendant transfer tax when those properties sell–will reportedly raise $365 million, according to The Real Deal. The money will head straight to the MTA. The new tax will top out at 4.15 percent.
According to Bloomberg, a series of graduated tax levies, paid by the buyer, starting at 1 percent, will be added to all New York City apartments selling for $1 million or more. That rate goes up at $2 million and reaches that 4.15 percent high on $25 million properties. The projected $365 million in revenue would mean $5 billion in bonds headed for mass transit. The last iteration of the mansion tax levied a flat 1 percent on apartments starting at $1 million.
Governor Cuomo said in a statement announcing the new budget “This has five or six major, difficult long-term issues that had to be dealt with, and it deals with them in a fiscally responsible way. This is the leading state in terms of being progressive. We’ve established that. I believe with this plan we also lead the nation in terms of innovation, and building, and reform.”
Americans are on the move, but where are they moving to and from?
Interactive Map: To understand inbound and outbound percentages for each state, use the legend. To view reasons for moving and demographic data, select the year and state that you would like to view using the dropdown menus. (If you are using a desktop computer, you can use your mouse to click and select a state.)
Americans are on the move, relocating to western and southern parts of the country. We love moving from Los Angeles to another city as it brings in excitement and also new adventures in life. The results of United Van Lines’ 42nd Annual National Movers Study, which tracks customers’ state-to-state migration patterns over the past year, revealed that more residents moved out of New Jersey than any other state in 2018, with 66.8 percent of New Jersey moves being outbound. The study also found that the state with the highest percentage of inbound migration was Vermont (72.6 percent), with 234 total moves. Oregon, which had 3,346 total moves, experienced the second highest percentage nationally, with 63.8 percent inbound moves.
States in the Mountain West and Pacific West regions, including Oregon, Idaho (62.4 percent), Nevada (61.8 percent), Washington (58.8 percent) and South Dakota (57 percent) continue to increase in popularity for inbound moves. In tune with this trend, Arizona (60.2 percent) joined the list of top 10 inbound states in 2018.
Several southern states also experienced high percentages of inbound migration, such as South Carolina (59.9 percent, this makes moving to Greenville very popular) and North Carolina (57 percent). United Van Lines determined the top reasons for moving south include job change (46.6 percent) and retirement (22.3 percent).
In the Northeast, however, an outbound moving trend continues. New Jersey (66.8 percent), Connecticut (62 percent) and New York (61.5 percent) were included among the top 10 outbound states for the fourth consecutive year. Midwestern states like Illinois (65.9 percent), Kansas (58.7 percent), Ohio (56.5 percent) and Iowa (55.5 percent) saw high outbound relocation as well.
“As the nation’s largest household goods mover, our study allows us to identify the most and least popular states for residential relocation throughout the country, year after year,” said Eily Cummings, director of corporate communications at United Van Lines. “These findings accurately reflect not only where Americans are moving to and from, but also the reasons why.”
The National Movers Study reveals the business data of inbound and outbound moves from 2018. In addition to this study, United Van Lines also conducts a survey to find out more about the reasons behind these moves. A leading motivation behind these migration patterns across all regions is a career change, as the survey showed approximately one out of every two people who moved in the past year moved for a new job or company transfer. Other reasons for the high percentage of moves to the Mountain West in 2018 include retirement (28.1 percent), proximity to family (20.8 percent) and lifestyle change (19.4 percent). Compared to all other states, Idaho saw the largest influx of new residents desiring a lifestyle change (25.95 percent), and more people flocked to New Mexico for retirement than any other state (42.74 percent).
“The data collected by United Van Lines aligns with longer-term migration patterns to southern and western states, trends driven by factors like job growth, lower costs of living, state budgetary challenges and more temperate climates,” said Michael Stoll, economist and professor in the Department of Public Policy at the University of California, Los Angeles. “Unlike a few decades ago, retirees are leaving California, instead choosing other states in the Pacific West and Mountain West. We’re also seeing young professionals migrating to vibrant, metropolitan economies, like Washington, D.C. and Seattle.”
The top inbound states of 2018 were:
District of Columbia
New to the 2018 top inbound list are Arizona at No. 5 and District of Columbia at No. 10, with 60.2 percent and 56.7 percent inbound moves, respectively.
The top outbound states for 2018 were:
New Jersey (66.8 percent), which has ranked in the top 10 for the past 10 years, moved up one spot on the outbound list to No. 1. New additions to the 2018 top outbound list include Iowa (55.5 percent), Montana (55 percent) and Michigan (55 percent).
In several states, the number of residents moving inbound was approximately the same as the number moving outbound. Arkansas and Mississippi are among these “balanced states.”
Since 1977, United Van Lines has annually tracked migration patterns on a state-by-state basis. The 2018 study is based on household moves handled by United within the 48 contiguous states and Washington, D.C. and ranks states based off the inbound and outbound percentages of total moves in each state. United classifies states as “high inbound” if 55 percent or more of the moves are going into a state, “high outbound” if 55 percent or more moves were coming out of a state or “balanced” if the difference between inbound and outbound is negligible.
To view the entire 2018 study, an interactive map and archived press releases from United, visit the United Van Lines website.
Construction of new homes increased 3.3 percent in November — with the gain largely coming from single-family houses being built at the strongest pace in more than a decade.
The Commerce Department said Tuesday that builders broke ground on homes last month at a seasonally adjusted annual rate of 1.3 million units. The increase marks a key moment in the recovery from the Great Recession: Builders started work on single-family houses at the fastest pace since September 2007, which was just a few months before the start of that economic downturn.
Ralph McLaughlin, chief economist at the real estate company Trulia, said completed new homes are likely to finish at a post-recession high, but completions are still just 65 percent of their 50 year-average.
Driving the rebound in home construction has been a shortage of existing properties being listed for sale.
Fewer people are putting their property on the market, despite healthy demand from buyers because the unemployment rate is at a 17 year-low and mortgage rates remain at attractive levels. New construction has filled some of this gap with starts on single-family houses rising 8.7 percent so far this year.
Still, not enough new homes are being built to totally end the supply squeeze. Over the past year, the number of sales listings for the much larger market for existing homes has fallen 6.4 percent.
The construction growth last month came from the South and West, while the Northeast and Midwest reported declines.
Builders are also backing away from the apartment rentals that until recently were a driving force behind the rebound in residential construction. Ground breakings for multi-family buildings such as apartment complexes have declined 8.5 percent year-to-date.
The move away from apartment construction has corresponded with a shift by the millennial population toward buying homes, said Mark Fleming, chief economist at First American Financial, a real estate transactions firm.
These single family houses come with a new color choice to make the place come to life rather than the usual real estate properties that take time to build blea looking homes.
“The last two quarters have seen an increase, specifically a shift from renter occupied to owner occupied households, as Millennials age out of rentership and into homeownership,” Fleming said.
Building permits, an indicator of future construction, slipped 1.4 percent in October to 1.3 million. But the number of permits authorized so far this year has increased 5.8 percent.
Relatively low mortgage rates have helped would-be homebuyers, even as property prices have climbed faster than wages. The average rate on 30-year fixed-rate U.S. mortgages was 3.93 percent last week, slightly better than the 4.16 percent rate a year ago, according to mortgage Freddie Mac.
The developer assembled a vacant plot of land — formerly a Shell gas station and a parking lot — at Frederick Douglass Boulevard and West 122nd Street in Harlem over roughly four years, from 2011 to 2015. He then secured approvals to construct a 12-story, 127-unit residential building on the site, which offers 205,000 buildable square feet.
But in June of last year, Futterman, who declined to comment for this story, defaulted on a $36 million loan from RWN Real Estate Partners, and five months later his development firm filed for Chapter 11 bankruptcy protection. The bankruptcy auction is now set for June 21, and sources said the site could sell for as much as $70 million — about $44 million more than Futterman paid for the stretch of land over the years.
A source said Futterman pumped “his life savings” into the project — and that he is still holding out hope to develop it himself.
“This is the reality of the market today,” said Cushman & Wakefield’s Bob Knakal, who is handling the bankruptcy auction with colleague Adam Spies. “Transactions are not going the way owners want.”
Indeed, the first signs of distress have emerged in several pockets of New York City’s commercial real estate market in recent months. Retail vacancies, declining hotel revenues and foreclosures on Park Avenue are among a flurry of indications that the market is inching closer to the brink of financial trouble.
“There’s a lot more stress in the system than most people probably realize,” said Iron Hound Management’s Robert Verrone, who added that his mortgage brokerage is handling more workouts nationally than ever before.
The influx of troubled loans is a product of the 2007 lending boom, and $90 billion in commercial mortgage backed-securities backed by properties across the country are set to mature this year. Sean Barrie of Trepp, which tracks CMBS, noted that the massive batch of loans was “underwritten pretty liberally,” and now, many of those sponsors may face difficulty refinancing their over-leveraged assets.
Attorney Ray Hannigan, of Herrick Feinstein, who specializes in foreclosures and workouts, said the tri-state area is already seeing a substantial influx of those maturity defaults.
“It’s a long time coming,” he said. “The market needs to work through this latest cycle and weed out the good and the bad.”
The bad can be found across the five boroughs. In Brooklyn and Staten Island, scheduled foreclosure auctions are making a comeback. There were 90 foreclosure auctions in Brooklyn in March, a 125 percent year-over-year increase. Staten Island — where the real estate market has been less active — had 32 in the same month, a 10 percent increase from the previous year, according to California-based research firm ATTOM Data Solutions data provided to The Real Deal.
ATTOM data also showed that there was a 327 percent increase in New York City multifamily and retail sales to third-party investors in foreclosure auctions in 2017’s first quarter, year-over year. Similarly, the number of bank-owned commercial properties rose 8 percent year-over-year.
No one is suggesting that distress is widespread — yet. More than 25 lawyers, economists, lenders and brokers who spoke to TRD for this story were confident that although a decline is around the corner, it won’t be as severe as it was 2007 or 2008 — when, as attorney Wallace Schwartz of the national law firm Kasowitz put it, “everything fell off the table.”
“Distress is a very macro word,” said Ayush Kapahi of capital advisory firm HKS Capital Partners. “There’s something churning. I don’t know if the word ‘distress’ will apply, or if it will just be a market reset.… There are so many variables that go into a storm.”
To get a better idea of the extent of the trouble in the market, TRD took a temperature check of all the commercial real estate asset classes across the city.
When real estate developer Billy Macklowe proclaimed, “I think retail is fucked, plain and simple,” in late April, he was echoing a sentiment widely shared among industry insiders: Of all commercial real estate asset classes, retail is showing the clearest signs of distress.
“Retail is a disaster in New York City,” one source said on the condition of anonymity. While part of that situation is due to the continual rise of online retailers, “another part of it is people are too greedy,” the source added in reference to landlords seeking steep rents.
Indeed, brick-and-mortar stores across the country are collapsing due to high overhead, weak sales and mounting debt, and major U.S. retailers including American Apparel and Aeropostale, among many others, have filed for bankruptcy.
Some retailers are making real estate moves to stay afloat amid falling sales. Department store Lord & Taylor is considering adding a residential tower on top of its flagship at 424 Fifth Avenue and Neiman Marcus recently met with Related Companies about a potential merger — a deal that Related chair Stephen Ross later said would not happen.
No major retail landlords in the city have defaulted on their loans because of the waning market, but many are seeing increased vacancies. Last year, availability rates on Fifth Avenue between 42nd and 49th streets hit a high of 31 percent, Cushman data show. All in all, eight of Manhattan’s 11 major retail neighborhoods saw availability rates grow between 0.6 and 8.2 percent, according to the commercial brokerage.
“Look anywhere in the city and you see unusually high vacancy,” said real estate attorney Joshua Stein. To be sure, there is more leasing activity taking place on less-glamorous stretches like Ninth Avenue (see related story).
Most recently, Ralph Lauren announced it would be closing its 39,000 square-foot flagship store at the Coca-Cola Company’s 711 Fifth Avenue. The retailer will continue to pay a whopping $70,000 per day in rent as part of the lease, which expires in 2029, if it can’t get out of the arrangement.
And as leasing volume slows, landlords are wooing new tenants by offeringconcessions, including cheaper rents, build-outs and more flexible deal terms.
Jack Terzi’s JTRE Holdings, for example, has reportedly been in contract for nearly a year to pay about $140 million for a vacant six-story retail building at 23 Wall Street. Sources said that over that time, Terzi has had difficulty locking in financing and securing a flagship tenant, though Uniqlo is among the prospective retailers that have negotiated for space there.
Of the $7.53 billion in 200 CMBS notes backed by retail properties in New York City, five, totaling $77 million, are with a special servicer, according to Trepp.
“Retail dynamics and challenges are certainly not unique to New York,” said Sam Chandan, an economist and associate dean at New York University’s Schack Institute of Real Estate. “New York has a very unique retail footprint by virtue of it being a dense tourist market and one where most retail is ground floor or street-facing. There will be some difficult adjustments.”
The hotel industry is also facing an uphill battle to absorb oversupply in the city and combat online home-sharing marketplace Airbnb.
“The industry’s struggle is really playing out in the room rates, which have declined and are expected to continue to do so,” said Peter Muoio, chief economist and head of research at online real estate marketplace Ten-X.
Revenue per available room fell to $163 during the first three months of this year — its lowest level of the current cycle and a 2.3 percent drop year-over-year, according to a recent report from hotel-and-data analytics firm STR.
Transactions are also down, as New York City saw $2 billion in hotel deals in 2016, a sizable drop from $4.8 billion the prior year, according to STR. The 2015 figure, it should be noted, included the blockbuster $1.95 billion sale of the Waldorf Astoria to Anbang Insurance Group. Many of the 2016 deals were for “upper midscale” or “upscale” properties, unlike 2015 when most hotels that sold were “luxury” or “upper upscale,” according to the data firm’s report.
Sources said that so far, hotel owners have been able to largely escape trouble with a “big paydown” through a recapitalization or a sale, but the few hotels that were sold in the last two years have done so at a loss. Thor has been in contract since the fall to purchase PGIM Real Estate’s five-star James New York hotel in Soho for $70 million — a $13 million drop from the property’s previous sale price of $83.4 million in 2013.
While some hotels are simply depreciating in value, at least one is facing foreclosure. The four-star, boutique Mansfield Hotel at 12 West 44th Street in Midtown has been hemorrhaging cash for more than a year as the owner, Ark Partners, has struggled to sell for $65 million.
Court records show Wells Fargo, the trustee on the hotel’s $20 million loan, is working through foreclosure proceedings with the developers.
A wide range of Manhattan hotels are on the market, though very few have been able to find a buyer quickly. The properties on the hunt include the Park Lane Hotel, the Quin, the Standard High Line and Hotel Wales.
On the third day of Mortgage Bankers Association National Secondary Market Conference and Expo in New York City, three economists took the stage to explain their view of the housing market, and their forecast for 2017.
Freddie Mac Chief Economist Sean Becketti, Fannie Mae Chief Economist Doug Duncan and MBA Chief Economist Mike Fratantoni gave their projections over the chance of a recession within the next 12 months.
Becketti emphasized that while the chance of a recession increased, it would need to be driven by a specific event.
“Recessions are event driven, the economy doesn’t just run out of gas and slow down,” Becketti said.
Fratantoni predicted a 15% to 20% chance of a recession over the next 12 months, while Duncan pushed it to a 30% chance. He listed several factors including a peak in consumer credit card usage, auto sales and corporate debt, which could point to a looming recession.
The three economists pointed out that while employment is rising, there are still gaps in the growth.
What we’ve seen has been a polarization of jobs, Becketti said. Jobs have left the mid-skill level and gone to the high-skill level, and low skill jobs have also seen growth. The reason for this shift is that mid-skilled jobs are easier to automate.
But even as jobs polarize, the growth between urban and suburban areas leveled out, becoming more equally distributed between the two areas, Duncan said. However, this leveling out in the location of jobs is creating more problems in the housing market.
“But now urban areas are the most difficult area to build entry-level housing due to cost of land,” he said.
As the year goes on, Fratantoni predicted the market will see two more rate hikes – one in June and one in September, saying the year would finish with a 30-year fixed-rate mortgage rate of 4.5%.
Becketti predicted slightly more, saying the Federal Open Markets Committee could raise rates from two to three times this year, but said the year will end with a 30-year FRM of about 4.4%.
Duncan, who predicted the highest chance of a recession in the next 12 months, agreed the Fed will raise rates twice more this year, however kept it’s rate for the end of 2017 more conservative at 4.2%.
“We’re not convinced that inflationary pressures are enough to make the Fed more aggressive,” he said.
Click to Enlarge
(Source: Freddie Mac)
But for now, the housing market continues to boom as home prices hit their previous peak nationally, and even significantly surpassed it in some states.
This map shows the states in relation to their former peak:
Click to Enlarge
All three economists were puzzled by the substantial increase in Texas, saying they could only venture to guess that while there is plenty of land to spread out in the state, the jobs are more centered, driving home prices up in key areas, such as Dallas.
And what about the rumored housing bubble? Fratantoni asked: Is San Francisco in a housing bubble? Becketti’s answer, to put it simply, was no. He answered that the city is subject to a tech collapse, but said it will not collapse on account of affordability.
The Pending Home Sales Index decreased 2.5% in November 2016 to its lowest level since January 2016, and is 0.4% below November 2015. The Pending Home Sales Index (PHSI), a forward-looking indicator based on signed contracts reported by the National Association of Realtors (NAR), decreased to 107.3 in November 2016 from 110.0 the previous month.
The PHSI increased 0.6% in the Northeast, but fell 1.2% in the South, 2.5% in the Midwest and 6.7% in the West. Year-over-year, the PHSI increased 5.7% in the Northeast, but decreased 1.0% in the West, 1.3% in the South and 2.4% in the Midwest.
NAR recently reported a decline in confidence among renters who are contemplating the best time to buy a home. The election boosted the U.S. 10-year Treasury note from 1.83% the day before the election to 2.54% on December 28, 2016, and mortgage rates followed quickly. The Freddie Mac Weekly Survey reported a 30-year commitment rate of 3.54% on November 3, which increased to 4.30% for the week ending December 22, 2016. However, November existing sales continued a solid year-end path, and total 2016 existing sales are expected to reach the highest level since 2006. As the economy adds jobs, increased demand among first-time buyers will help fuel existing sales into 2017.
US home price gains slowed slighting in July, as many on Wall Street are speculating that the Federal Reserve will raise rates before the end of the year. The S&P/Case-Shiller 20-City Composite Index rose 5.0% year-over-year, missing analysts’ expectations of a 5.1% increase but still above the 4.8% pace of the prior two years.
The recent surge in real estate demand has pushed home prices near their pre-crisis peak in 2006, which is making it increasingly difficult for new home buyers to enter the market. Home sales fell 0.9% in August from the previous month, according to the National Association of Realtors. That’s the second straight month of declines.
Higher home prices have begged the question by many as to whether the current pace is sustainable, or if there’s reason to fear another massive collapse in real estate.
“There’s always reason to worry [about a coming collapse],” Robert Shiller, Nobel Prize–winning economist and co-creator of the S&P/Case Shiller Index, told Yahoo Finance’s Seana Smith in the video above. But he is quick to point out one stark difference between today’s housing market and that of 2006. “We’re in a holding pattern right now … People are less excited about buying because they themselves don’t believe [home prices] will be going up a lot. Back in 2006, when the homeownership rate was setting records, people had extravagant expectations.”
His comments on Americans’ hesitation to buy echo the findings of a recent study byPulsenomics, which found that just 38% of renters surveyed think now is a good time to buy. Today, home values have reached or surpassed peak levels in about a quarter of US markets.
How rising rates could impact the housing market
While prospective buyers continue to benefit from relatively low borrowing costs, the big question is whether a series of rate hikes will increase mortgage rates and prompt a fallout in the housing sector. Fed funds futures suggests a roughly 57% chance of higher US interest rates by December, according to data from CME Group.
Shiller says it’s very difficult to forecast how the housing market will react to rising rates but is quick to point out that even in an uncertain environment, rate hikes shouldn’t be a factor for potential buyers.
“The Fed raised [rates] in December just a quarter of one percent, and plausibly they’ll raise [rates] by another quarter or a half percent, and it may not be a big deal,” said Shiller. “On the other hand, it might be a big deal because we’re in this strange period of near zero interest rates, and if people see it as a major turning point, it could affect home prices … My opinion is if you want a house, go out and buy it. It’s not an extremely unusual time. There are always risks.
The Pending Home Sales Index decreased 2.4% in August, declining for the third time in four months, and falling 0.2% below its level for the same month a year ago. The Pending Home Sales Index (PHSI), a forward-looking indicator based on signed contracts reported by the National Association of Realtors (NAR),decreased to 108.5 in August from a downwardly revised 111.2 in July.
The PHSI increased 1.3% in the Northeast in August, consistent with the 6.1% increase in existing sales in the Northeast reported last week. But the PHSI decreased in the remaining regions, ranging from 0.9% in the Midwest to 3.2% in the South and 5.3% in the West. Year-over-year, the PHSI was up 5.9% in the Northeast, but fell 0.6% in the West. 1.5% in the South and 1.7% in the Midwest.
NAR attributed the PHSI decline to a lack of inventory. However, builder confidence surged in September along with consumer confidence. Also, August new home sales recorded their second strongest month since the Great Recession. These reports suggest good news for new construction as the housing recovery continues to address demand among first-time buyers and broaden across a wider range of markets during the balance of 2016.
According to new results from the American Bankers Association’s Consumer Credit Delinquency Bulletin, consumers are handling the loan responsibility well, with home-related delinquencies down in two out of three categories compared to the previous quarter.
“As the housing market continues its slow and steady recovery, consumers have more valuable equity at stake, which makes their loan payments even more of a top priority,” said James Chessen, ABA’s chief economist.
“Growing equity also makes new home equity loans a viable option for qualified home owners. The market for home equity loans and lines will likely continue to grow as a larger pool of qualified borrowers looks to take advantage of low rates to make property improvements or pay off higher-interest debt,” he continued.
Home equity line delinquencies dropped 3 basis points to 1.15% of all accounts. Meanwhile, home equity loan delinquencies increased 6 basis points to 2.74% of all accounts after falling 23 basis points in the previous quarter.
It’s important to note that the first quarter marks the first time since 2008 that both home equity loan and line delinquencies are at or below their 15-year averages.
As far as the third category, property improvement loan delinquencies fell 3 basis points to 0.89% of all accounts.
For background, Bankrateexplains that there are two types of home equity loans: term, or closed-end loans, and lines of credit.
A home equity loan comes in one-time lump sum that is paid off over a set amount of time, with a fixed interest rate and the same payments each month.
On the other hand, a HELOC is more comparable to a credit card.
At the start of this year, BlackKnight reported that HELOCs started to surge in 2015 and was only predicted to maintain its upward trajectory into 2016.
At the time, Black Knight Data and Analytics Senior Vice President Ben Graboske said, “In total, we’re looking at over 37 million borrowers with current CLTVs below 80% that have an average of $112,000 equity available to tap in their homes, an increase of 3.1 million from just a year ago.”
The growing potential of borrowers who could capitalize on low interest rates paired with lenders trying to find new sources of business created a new surge in home equity loans.
After the financial crisis, home equity lines of credit fell to the wayside as lenders scaled back on giving out second liens and many cut existing credit lines to avoid new defaults, an article in The Wall Street Journal by Annamaria Andriotis said.
But this all started to change due to increasing property values, the growing number of homeowners who have equity available for withdrawal and lenders needing to offset faltering mortgage originations.