Mortgage Holders Lose $1.3 Trillion in Equity in Q3 as Price Correction Continues; Nationally, homes have lost 2.6% of their value in the past three months

0
  • According to the Black Knight Home Price Index, median home prices fell 0.52% in September, continuing a three-month streak of back-to-back declines, but slowing to half the pace of the previous two months.
  • Annualized appreciation slowed to 10.7% – still more than double long-term norms – and, although indicating a continued correction, the 1.2% decline from August is the smallest seen in four month
  • Despite price corrections, home values ​​in the country’s 50 largest markets remain high by 19% to 66% since the start of the pandemic
  • Still, $10.3T (-7.6%) of recently added stocks disappeared from the market in the third quarter, the dollar’s largest quarterly decline on record and the largest percentage since 2009
  • Equity in mortgaged homes is now almost $1.5T (-8.4%) on its May 2022 peak, with average borrower’s equity falling $30,000 from the beginning of this year
  • While further declines could be on the horizon, equity positions remain strong; at $5,000,000 (46%) above pre-pandemic levels, the average mortgage holder still has more $92,000 more equity than before
  • Although the number of submarine owners has almost increased 275K over the past four months — more than doubling the population — less than 500K homes are currently under water across the country
  • Nationally, 3.6% of borrowers are underwater or have less than 10% equity, about half of the pre-pandemic share; a historically and extremely low share (0.84%) are in a negative equity position

JACKSONVILLE, Florida., November 7, 2022 /PRNewswire/ — Today, the Data & Analytics division of Black Knight, Inc. (NYSE: BKI) released its latest Mortgage Monitor report, based on industry-leading mortgage, real estate and the company’s public records. As home price corrections continue across much of the country – albeit at a slower pace nationally than in the previous two months – the impact on homeowners’ net worth levels becomes clear. As President of Black Knight Data & Analytics Ben Grabosk explains, after peaking in the second quarter of this year, owners’ equity saw record levels of contraction in the third quarter of 2022.

“In the space of just three months, US mortgage holders have seen a total of $10.3T of newly acquired stock evaporates,” Graboske said. “This is – by far – the largest quarterly decline ever in dollar value and the largest since 2009 in percentage terms. As we reported at the time, while hitting a record high in the second quarter, total owners’ equity peaked mid-quarter in May and has been falling ever since. Overall, the equity in mortgaged properties is now down by nearly $1.5T from this point. From a risk perspective, we have already seen the number of underwater borrowers more than double as equity declines. That said, it’s important to note that — even with 275K falling underwater since May – less than half a million homeowners owe more on their homes than they are now worth. Historically speaking, this remains extremely low.

“Additionally, as we’ve covered in previous Mortgage Monitors, the vast majority of homes at risk of going underwater are those purchased in 2022 and late 2021, at peak market prices. pandemic era or close.While these loans are clearly worth caution, ongoing monitoring, to put this in context, only 3.6% close 53M US mortgage holders are either underwater or have less than 10% of their home equity, or about half of the share entering the pandemic. Although further declines may be on the horizon, owners’ positions remain strong overall. The overall equity of mortgage holders is still $5,000,000 (+46%) higher than pre-pandemic levels, for an average gain of more than $92,000 per borrower during this period. Of course, this – along with rising interest rates – increases the potential for even greater headwinds in equity lending as well as increased default risk.”

This month’s Mortgage Monitor also draws on daily disaster alerts and McDash Flash mortgage yield data from Black Knight to gauge the impact of Hurricane Ian on Florida. The 2.5M mortgaged homes in FEMA-reported county-level disaster areas carry a total outstanding balance of more than 500 billion dollars and together account for 60% of all mortgaged homes in the state. While this may suggest broad, high-level estimates of properties potentially impacted by a storm, parcel-level data from Black Knight Disaster Alerts provides much more granular detail. From these 2.5M total properties, just 355K were directly in the path of the storm and face a higher risk of property damage and mortgage defaults. Another one 100K were within the disaster alert buffer zone, representing a moderate risk, while more than 2 million (80%) of properties in FEMA-reported counties were not in the storm’s direct path and are therefore less exposed to the risk of financial loss and mortgage default.

Combining impact areas identified by disaster alerts with daily McDash Flash loan-level performance data allows Black Knight to compare payments received in impacted areas via October 19 to the share received at the same time in September. In Florida, counties not declared disaster areas, 93.7% of October payments were made, only slightly below the 93.9% on the same day in September. However, for parcels directly in Ian’s path, 3.3% fewer borrowers – with 1.2% fewer borrowers in the buffer zone – made their October payments. Specifically, in FEMA-reported counties outside of identified disaster alerts in the storm’s direct path and buffer zone, all but 0.5% fewer borrowers had made their mortgage payments, suggesting that those directly in the path of the storm were nearly 7 times as many. likely to become delinquent than counties declared by FEMA outside of this pathway. If these deficits continue until the end of the month, about 20-25K borrowers in Florida one can expect to become delinquent as a result of the storm.

Much more information on these and other topics can be found in this month’s Mortgage Monitor.

About Mortgage Monitor

Black Knight’s Data & Analytics division manages the nation’s leading repository of loan-level residential mortgage data and performance information covering the majority of the global market, including tens of millions of loans across all of Black Knight’s products. credit and over 160 million historical records. . The combined view of home price and real estate data from Black Knight HPI and Collateral Analytics provides one of the most comprehensive, accurate and timely measures of home prices available, covering 95% of US residential properties up to at postcode level. Additionally, the company maintains one of the strongest databases of public property records available, covering 99.9% of the US population and households in over 3,100 counties.

Black Knight’s research experts carefully analyze this data to produce a summary supplemented by dozens of tables and graphs that reflect trends and point observations for the Monthly Mortgage Monitor Report. To view the full report, visit: https://www.blackknightinc.com/data-reports/

About the Dark Knight

Black Knight, Inc. (NYSE: BKI) is an award-winning software, data and analytics company that drives innovation in the mortgage and real estate lending and servicing industries, as well as in capital markets and secondary. Businesses leverage our robust integrated solutions across the homeownership lifecycle to help retain existing customers, win new customers, mitigate risk and operate more efficiently.

Our customers rely on our proven, comprehensive, and scalable products and our unwavering commitment to providing superior customer support to achieve their strategic goals and better serve their customers. For more information about Black Knight, please visit www.blackknightinc.com/.

SOURCEBlack Knight, Inc.

Share.

Comments are closed.