Home equity is on the rise, which brings both risk and opportunity to lenders
DES PLAINES, IL — March 8, 2017 — Summit Valuations, LLC, a full service valuation company, announced today the release of its March Residential Real Estate Market Overview based on data compiled in January 2017, the most current industry information available. This month’s report includes an analysis of Home Equity, Interest Rates, and Emerging Trends from Chief Valuation Officer Mark Melikian.
“Home prices nationwide have been rising since 2009. In the past five years alone, the median sales price of an existing home has risen by 32 percent,” Melikian said in his report. “This increase in equity combined with rising interest rates is leading more homeowners to Home Equity Lines of Credit. Indeed, as Moody’s recently pointed out, HELOC volume has increased 21 percent in the past two years, reaching its highest level since 2008. This trend will likely continue into the near future as home prices and interest rates continue to increase.”
But Melikian cautioned that in the cyclical mortgage market, increasing HELOC originations will also bring increased risk.
“As the number of junior liens increase, the potential for heightened risk in the real estate market exists as more homeowners leverage their recent gains in equity,” Melikian said. “The same home price appreciation and rising interest rates that have led to an increase in HELOC activity will likely cause a slowdown in home price appreciation as affordability lessens in those markets. Thus, a lender or investor involved with HELOCs (or any junior liens) would be wise to focus on the quality of their real estate valuation methods to mitigate exposure to risk.”
As for the January numbers, the months supply of housing and the unemployment rate both decreased year over year. The median sales price, the seasonally adjusted number of homes sold, the pending home sales index and mortgage interest rates all increased during the period.
On a regional level the South had the highest number of existing home sales and the West had the highest median price. The Midwest experienced a month over month decline in the number of seasonally adjusted existing home sales while all other regions saw gains. All regions experienced declines in the median sales price month over month, with the Northeast seeing the smallest decline.
Summit’s report provides data made public by the U.S. Government, the National Association of Realtors and Freddie Mac. Melikian has been appraising real estate since 1987 and has been active in nationwide valuation services since 2005. He has successfully led teams of analysts, developed valuation services to meet client needs and represented buyers and sellers in secondary market loan tie out meetings. Much of his recent experience has focused on forensic reviews of REO properties for Fannie Mae and Freddie Mac. Mr. Melikian holds a B.S. in Business Administration from San Diego State University.
About Summit Valuations:
Summit Valuations, LLC, Niles, Illinois, was established in 2007 as a full service valuation company offering a single source for nationwide real estate valuations, including residential and commercial BPOs, inspections and full appraisals. The founders applied over 20 years of national real estate experience to build a company that has built its reputation based on higher standards and superior results. All reports can be delivered to our customers via email or downloaded from our secure website. The company’s services are designed to offer faster turnaround times, thorough quality assurance, streamlined ordering and delivery processes, and accurate results. As one of the fastest growing property valuation companies in the country, Summit is dedicated to accuracy and unparalleled customer service. Find out more by visiting the company’s website.
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