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The True Strength of Today's Homeowners

Friday, September 30, 2022   /   by Laura Larson

The True Strength of Today's Homeowners


Many people these days are thinking about the real estate market. That's because the unsustainable market of the previous two years is over, and people can already tell the difference. What remains to be seen is how financially secure homeowners are nationwide. Over the last year, mortgage debt surpassed $10 trillion for the first time in history, which many viewed as a worrying indication.

Recently, First American's Deputy Chief Economist Odeta Kushi responded to the query by saying: “U.S...real estate owned by households is valued at $41 trillion, with slightly over $12 trillion in debt and around $29 trillion in equity. The national "LTV" fell to 29.5% in Q2 2022, the lowest level since 1983."

She continued, saying: "In Q2 2022, homeowners had an all-time high average amount of inflation-adjusted equity in their homes of $320,000."

LTV stands for loan to value ratio. Here is how the Mortgage Reports defines it for further information: "The size of your mortgage debt in relation to the value of your house is compared by the term "loan to value ratio" (LTV). If your LTV ratio is 90%, for instance, your home is worth $200,000 but you only owe $180,000 on your mortgage because the loan only covers 90% of the entire cost."

LTV can also be viewed in terms of your deposit. A 20% down payment translates into borrowing 80% of the home's worth. Your LTV to Value Ratio is 80%.

Why is this crucial?
This is just another factor preventing the home market from collapsing. Homeowners can exercise influence thanks to their equity. For instance, if someone needed to sell their house, it's likely that they would have enough equity to do so while still making a profit. When many people owed more on their homes than they were worth in 2008, this was not the case.

Bottom Line
Today's homeowners are in better financial shape than they have been since 1983. This is a result of both how homeowners have managed equity since the housing meltdown and the recent uptick in property values. To learn more about how your home equity might help to sell your home and buy a new one, contact Laura Larson today!
Larson Fine Properties
Laura Larson
7294 Joffa Circle
Warrenton, VA 20187

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