Housing Prices Near All Time High of 2006

A building and renovation at a coastal home in the Indian Beach neighborhood of Sarasota, Fla., on June 16, 2018. (Kerry Sheridian/AFP via Getty Images)

American mortgages holders saw their collective tappable equity, the amount owners have available to borrow against a home while retaining a stake of at least 20 percent, increased by a record $1.2 trillion in the first quarter of 2022, according to Black Knight’s Mortgage Monitor Report released on June 6.

Mortgage holders have gained a total of $2.8 trillion in tappable equity over the past 12 months, an increase of 34 percent—the equivalent of more than $207,000 in equity available per borrower.

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Although rising home prices and interest rates have tightened affordability in the housing market, the same price dynamics have, at least temporarily, managed to increase the housing wealth of existing American mortgage holders significantly.

“In total, American mortgage holders have more than $11 trillion in tappable equity, also a history-making total,” according to Ben Graboske, President of Black Knight.

“It really is a bifurcated landscape—one that grows ever more challenging for those looking to purchase a home but is simultaneously a boon for those who already own and have seen their housing wealth rise substantially over the last couple of years.”

“Depending upon where you stand, this could be the best or worst of all possible markets,” Graboske noted.

Meanwhile, the monthly principal and interest (P&I) payment on an average priced home with 20 percent down is nearly $600, which is 44 percent more than it was at the start of the year, and $865, or 79 percent more than at the start of the pandemic.

With 30-year mortgage rates at 5.25 percent, the share of median income required to make a P&I payment has climbed to 33.7 percent as of May 19, just half a point short of the previous record high of 34.1 percent in July 2006. And it is hurting prospective buyers.

Record Low Affordability

“Factoring in current income levels, housing is now within a whisper of the record low affordability seen at the peak of the market in 2006,” Graboske said.

U.S. home prices have gone up 42 percent since the start of the pandemic, with the average home price rising almost 9 percent since the start of the year.

“Home price growth cooled—albeit very slightly—in April,” Graboske noted regarding the uptick in home prices over last several months that has hurt home buyers especially hard.

“April’s decline is more likely a sign of deceleration caused by the modest rate increases in late 2021 and early 2022 when rates first began ticking upwards,” Graboske explained.

The annual rate of appreciation slightly dipped in April, with housing prices declining to 19.9 percent year over year from an upwardly revised 20.4 percent for March.

The Mortgage Monitor report explained that record-low for-sale inventories are a key contributing factor to home prices and affordability.

Record high home prices have continued to rise amid a lack of supply, perpetuating the worsening homebuying situation.

Despite an increase of 27,500 in housing stock from March to April, available home listings are 67 percent below pre-pandemic levels.

The figures have 820,000 fewer listings than average at this point during the typical peak homebuying season.

New listing volumes in April were up by by a mere 1 percent for the same month in 2021, 11 percent below the average pre-pandemic levels for the month, as the number of new or pre-existing homes hitting the market tumbled well below standard levels, according to the report.