The New York Fed report on Home Prices, Housing Wealth and Home Equity Extraction provides an interesting look at home prices and home ownership rates before and after the recovery.

Mortgage Debt

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Home Prices

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Ownership Rate

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Home Ownership Rates by Age

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Housing Wealth

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Median Borrower Equity 2006

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Median Borrower Equity 2011

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Bedian Borrower Equity 2017

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Wealth Shift

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Cash Out Refis Pick Up

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Borrowers Older

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Leveraging Wealth or Struggling to Pay Bills?

  • 2006 originators were primarily levering up, with a small decline in average credit card balances, and piggybacks a large share
  • 2017 originators’ credit reports show evidence of credit card and student loan consolidation

NY Fed Wrap-UP

  • Home prices have recovered, but homeownership has not, especially for younger Americans, compounded by tight underwriting
  • Housing wealth has shifted toward older, more creditworthy borrowers
  • Equity extraction is relatively low now, considering potential uses to borrowers and high levels of tappable equity

Mish Wrap-Up

  • Congratulations, Fed, you blew another bubble in which new borrowers cannot afford homes.
  • Cash-out refis have accelerated recently.
  • The NAR constantly moans about lack of supply of homes. As boomers die off, supply will increase.

Related Articles

  1. Housing ATM is Back (But it won't work any better this time)
  2. Mortgage Rates Highest Since 2013 Taper Tantrum: "It's Not a Drill, It's Panic"
  3. Fed Tightening Cycles Coincide With Bursting of Asset Bubbles: How to Play It

Mike "Mish" Shedlock

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