BAM Key Details:

  • Black Knight released its August 2023 Mortgage Monitor Report, which shows home prices reaching new highs at the national and local levels. 
  • After 14 months of slowing, the annual home price growth rate rose to +0.8% in June, up from May’s 0.2%. Home prices also grew month-over-month by a seasonally adjusted +0.67% in June. 
  • Despite a record high for overall outstanding mortgage debt, home price growth has driven homeowner equity levels back up to within 3% of 2022 peaks. 

Black Knight, Inc. just released its August 2023 Mortgage Monitor Report, revealing a new record high for home prices in three out of five (60%) major U.S. markets. 

Home prices grew month over month by a seasonally adjusted +0.67% in June. And after 14 months of slowing, the annual home price growth rate rose to +0.8% in June, up from May’s +0.2%. 

The upward pressure on home prices, sustained by historically low inventory levels, has also driven homeowner equity back up to within 3% of 2022 peaks, despite a record high in overall outstanding mortgage debt. 

We’ve been noting for some months that the recent rate of home price gains would have a lagging, but significant, impact on the annual rate of appreciation. Well, June marked that inflection point. Not only has the Black Knight HPI reached a new record high – on both seasonally adjusted and non-adjusted bases – but 60% of major markets have done so as well. After slowing for 14 straight months, the annual growth rate jumped back to 0.8% in June, up from just 0.2% in May, amid widespread growth that saw annual rates of appreciation inflect and begin to trend higher in more than 80% of markets. Rising home prices have boosted homeowner equity levels as well, which had been retreating from their 2022 highs not very long ago. In fact, despite total outstanding mortgage debt topping $13T for the first time in history, much of the decline in equity we’d tracked since last year’s peak has since been recovered.

Andy Walden

Black Knight Vice President of Enterprise Research

Home price growth strongest in Midwest and Northeast

Home prices increased month over month by a seasonally adjusted +0.67% in June, with 30 of the 50 largest markets seeing new highs. Annual growth, after slowing for 14 consecutive months, jumped to +0.8% in June, climbing well past May’s +0.2%.

More or less predictably, home price growth has been strongest overall in the Midwest and Northeast, with home prices in several Northeast metros rising 5-8% above 2022 highs. 

Meanwhile, home prices in West Coast metros and pandemic boomtown markets are still running below 2022 levels. 

Homeowner equity levels are now close to 2022 peaks

According to Black Knight’s report, overall outstanding mortgage debt exceeded $13T for the first time ever in June. At the same time, home price growth has driven homeowner equity levels back up to within 3% of last year’s peaks. 

Total mortgage holder equity rose above $16T, with tappable equity—all but 20% of a homeowner’s equity stake—increasing to $10.5T, within 4% ($434B) of 2022 peaks.

Also, while the number of today’s underwater homeowners has climbed nearly 70% from last year, it’s still 52% below 2019 levels. Nationwide, only 344K (0.65%) of mortgage holders owe more than the market value of their home. 

Overall mortgage-holder equity is now back above $16T, with some $10.5T of that being ‘tappable,’ or available for the homeowner to borrow against while still maintaining a relatively conservative 20% equity stake. The average mortgage holder has some $199K in tappable equity available to them; down somewhat from 2022’s historic highs but still a historically large amount regardless. In terms of negative equity, or ‘underwater borrowers,’ it’s a nearly nonexistent phenomenon in today’s market – just 344K homeowners currently owe more on their homes than the properties are worth. Yes, it’s true that is a 70% jump from this time last year – which may sound ominous – but everything is relative. There are less than half as many underwater homeowners than there were in 2019 before the onset of the pandemic, with only 3.9% having less than 10% equity, down from 6.6% in 2019.

Andy Walden

Black Knight Vice President of Enterprise Research

Read the full Mortgage Monitor report for more details. 

Takeaways for real estate agents

With home price growth rallying, homeowners have more wealth in their homes, and that, combined with current mortgage rates, could convince more of them to stay put. 

That said, the increase in home values could make it easier for those inclined to move, even with rates still high. Inventory can’t keep up with buyer demand, and motivated sellers who can swap homes without taking on a higher monthly payment (maybe due to mortgage rate buydown or because they’re moving to a more affordable area—or both) are more likely to list their homes right now. 

Keep this and other relevant data handy so you can help homeowners in your market decide whether it’s best for them to sell or rent out their current home. If they’re leaning toward the latter, help them prepare for what that entails. 

No one but a landlord really knows the demands on their time and money that go with that decision. So, if you can’t draw from your own experience, find someone in the area whose knowledge and experience in that area can help your clients.