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May 20, 2018 | NY Fed Study on Home Prices & Ownership Rates Shows Skewed Recovery Benefits

Mike 'Mish' Shedlock

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.
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

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May 20th, 2018

Posted In: Mish Talk

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