Homeowner equity climbs to a record high

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1. Homeowner equity climbs to a record high

49 percent of mortgaged residential properties in the United States were considered equity-rich in the second quarter, meaning that the combined estimated amount of loan balances secured by those properties was no more than half of their estimated market values.

That’s up about 2 percentage points from the previous quarter — and it’s higher than the peak levels reached last year before higher interest rates slowed down the housing market. By comparison, the share of equity-rich mortgages at the end of 2019 — before the pandemic hit — was around 27%.

Find a list of counties with the highest and smallest share of equity-rich homes here.

2. Bank capital rules risk shutting out first-time home buyers

Regulators have proposed changes to bank capital rules, which may lead to banks requiring more capital for certain mortgages, especially those with smaller down payments.

Critics warn this could make homeownership more difficult for first-time and minority borrowers, as it may increase borrowing costs and limit credit availability. Regulators are seeking feedback on these changes, arguing they are needed for financial stability.

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3. Catch up quick

🗳️ Aurora shareholders to vote on Better.com merger proposal. (NMP)

📈 Pennymac increases profits to $58M in Q2. (YahooFinance)

💸 Pay gap between biggest US cities is getting wider as wages slow. (Bloomberg)

🐂 Zillow issues bullish calls for these 48 housing markets. (Fortune)

4. First-time homebuyers need to earn 13% more

The required annual salary to afford a typical starter home in the US has risen to $64,500, a substantial increase from $57,300 in 2022, reports Redfin.

A person looking to buy today’s typical starter home would have a monthly mortgage payment of $1,610, up 13% from a year ago and nearly double the payment just before the pandemic.

That is, assuming there are starter homes available for purchase. Redfin Senior Economist Sheharyar Bokhari is pessimistic. “Buyers searching for starter homes in today’s market are on a wild goose chase because in many parts of the country, there’s no such thing as a starter home anymore.”

5. Mike Cagney's Figure lays off 90 employees

Figure Technologies has reportedly laid off 20% of its workforce, equating to 90 employees, amid preparations for an initial public offering (IPO) of its lending business, according to Bloomberg.

The decision to go public came after the lending division, now known as "LendCo", saw a record $900 million in volume during Q2, with the business profitable and having a contribution margin of more than 50%. Co-founder Mike Cagney expects a valuation of $2.5 billion for LendCo when it goes public.

☀️ See you on Wednesday!

P.S. Anytime I say “US”, I’m talking about a national aggregate. Regionally, the story can vary—a lot. One way to find regional specifics is to click the links to read the full stories/reports.

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