Homeownership in the U.S. in 2019

Recent U.S. national statistics show that home ownership has risen to an all-time high over the past 12 months. This has affected the percent of home equity that people have access to. According to Bankrate.com, recent numbers show that 34% of all homeowners in the United States now have 100% equity in their properties. This means that an increasing number of homeowners have either paid off their mortgage debt or they never had a mortgage, to begin with.

What is Responsible for the Rise in Home Equity?

Of the 127.59 million households in the United States, 34% now own a home. The rise in home costs has resulted in a huge boost in home equity. This is because homeowners are allowed to turn the equity they have paid into their home as a cash asset. If they run into trouble for any reason due to delinquent bills, they can use the equity they have built up in their homes for fast cash.

The housing industry has taken a turn for the better since the 2008 crash. More Americans own their own homes than ever before. More Americans can have the equity used as temporary cash when they need it most. But one interesting statistic is that the total equity Americans have pulled from their homes lately has hit a four-year low in the first quarter of 2018.

So What does this mean?

If the opportunity exists for people to cash in on their equity, but they decide not to do it, this probably means that fewer people need to do it. Since the unemployment rate is lower than it’s ever been and the economy is doing so well, many homeowners can hang onto their equity for another time and avoid getting back into debt. So that is great news for the US economy. HELOC (Home Equity Lines of Credit) are down 7%, to be exact, from the fourth quarter. Home Equity Lines of Credit function best in a market where people need more money to draw cash from. When things are positive in the economy generally, there is less of a need for HELOCs.

Still, there is something to be said for investments. If you are a homeowner who has a lot of equity in your home and you are doing all right financially congratulations! You should hang onto your equity as long as you can and only use it when it’s needed, and you don’t have the income from other sources. That being said, it’s there for you when you need it! The actual U.S. value of equity that Americans are currently able to draw from in cash has jumped by $380 billion in the first quarter to $5.8 trillion, according to a report from the Mortgage Monitor.

What About the Average Homeowner?

The average homeowner with a mortgage gained $14,700 in equity over the past year and has about $113,900 overall that they can use if they need to.  So, why have HELOC loans plunge in spite of higher equity amounts? Rising rates on first-lien mortgage agreements often ignite more HELOC lending. But statistics show that it hit a two-year low (according to Bankrate.com). This is likely because people do not like to borrow on their refinanced loan if they don’t have to do so because it can result in more interest over the term of the loan or higher balloon payments.

Every Situation is Different

Despite the fact that HELOC loans have decreased over the past 12 months and people are resisting the temptation to borrow on their home equity even though the opportunity is there, it remains a great opportunity to get ahead when other methods have been exhausted. This is what makes America so great-the ability to choose your path in life, including loans and investments. Think about your situation and decide is a HELOC loan is best for you and make sure to speak with a financial advisor or banker to learn more about how it works.