American Homeowners Lost $1.3 Trillion Of Equity In Their Homes In The 3rd Quarter Of 2022

American Homeowners saw their home values peak in the second quarter of this year. Unfortunately, it was short lived. American homeowners lost nearly $1.3 Trillion in equity from July through September. The value contraction is a record according to Black Knight’s Mortgage Monitor Report.

Equity among mortgaged homes is now nearly $1.5 trillion. This is down 8.4%, off its May 2022 peak. This means the average borrower is down $30,000 from earlier this year. However, equity positions are 46% above pre-pandemic levels.

The report found that $1.3 trillion (7.6%) in equity vanished from the market in the third quarter. This is the largest contraction in US history.

The report also shows the number of underwater homeowners has climbed nearly 275,000 over the past four months. Nationally, 3.6% of borrowers are either underwater or have less than 10% equity. 

The report also noted that median home prices continued to fall 0.52% in September. However, this is half the pace of the prior two months. 

Eight markets saw home values decline by 1% or more in September. 

In 10% of major markets it now requires twice the normal share of median household income to make a house payment. All in all, prices have fallen 2.6% since June. This is the first three-month decline since 30-year rates spiked to nearly 5% back in late 2018.

The national delinquency rate inched down 1 basis point in September to 2.78%. The number of borrowers with a single payment past due rose by 1%. However, 90-day delinquencies fell 1.5% in September. They are now only 24% above pre-pandemic levels.

Foreclosure starts declined by 9% to 18.4K holding the line at 3% of serious delinquencies in September. This is down slightly month over month and less than half of pre-pandemic levels.

Other report insights can be found here.

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