KTRH Local Houston and Texas News

KTRH Local Houston and Texas News

KTRH-AM covering local news from Houston and across Texas.

 

House Money: Homeowners Lose More Than A Trillion in Equity

The housing market that was red hot coming out of the pandemic is now cooling as fast as the November weather. Home sales, prices and demand continue to steadily decline, and it may be going beyond what some are calling a correction. A new CNBC report says American homeowners have lost about $1.5 trillion in collective equity just since May, due to falling prices. That comes out to an average of $30,000 in lost equity per borrower.

The double whammy of inflation and higher interest rates is keeping more buyers on the sidelines, while those who are in the market have a lot less to spend. "Since July of this year, home sales have gone down in every price range across the country," says Ted C. Jones, real estate expert with Stewart Title. "And inflation is a lot of that."

Jones tells KTRH that inflation has resulted in an extra $728 per month in living expenses for the average American. "What that does is reduce your borrowing capacity by almost $114,000," he says. "So if you're in the market, you're going to be buying a cheaper home, a lower priced home."

While many are looking for cheaper homes, others are sitting out the market altogether. "The number of first-time homebuyers last year hit an all-time record low, in fact it's down 24 percent from a year ago," says Jones. "So between rising interest rates and inflation eroding people's earning capability, I think we're going to continue to face some shrinking home values."

The good news, according to Jones, is that home values shot up so much in recent years that those who purchased years ago still have solid equity. The bad news is this trend of falling prices and values is likely to continue. "My forecast for next year is I'm looking at about a 10-12 percent decline in sales, and I'm seeing home prices dropping by 10-14 percent," he says.


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