NY Fed Study on Home Prices & Ownership Rates Shows Skewed Recovery Benefits

A report on home prices and housing wealth contains a set of interesting charts and observations.

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

Home Prices

Ownership Rate

Home Ownership Rates by Age

Housing Wealth

Median Borrower Equity 2006

Median Borrower Equity 2011

Bedian Borrower Equity 2017

Wealth Shift

Cash Out Refis Pick Up

Borrowers Older

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.

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Mike "Mish" Shedlock

Comments (14)
No. 1-14
Bam_Man
Bam_Man

It makes sense. Older homeowners - many being retirees - now earning 0.1% on their so-called "Money Market Accounts" are tapping the equity in their homes through cash out re-fis to pay their monthly
bills. Millenials get screwed twice. Homes are unaffordable for them and they will not even inherit their parents' home. The bank (mortgage holder) will get it.

Snow_Dog
Snow_Dog

The incentive to save is destroyed by ZIRP. Does it even matter what the vehicle for savings is?

You want to use the family house as your piggy bank? Fine, but then show me some real equity which most cannot do even ten years on into these 30 yr mortgages.

FelixMish
FelixMish

Here's a quick take on the map from 2006 to 2017:

FelixMish
FelixMish
FelixMish
FelixMish

Created with this command: convert -delay 50 -dispose None median_2006.jpg -geometry 706x414! -page +3+9 median_2017.jpg output
.gif