The U.S. housing market continues to implode with a record drop in pending home sales amid cancelled transactions and price cuts. According to a recent analysis by Black Knight research there are ~450,000 homebuyers that currently owe more than their house is worth at the end of Q3-2022. Of those ~60%, ~270,000, acquired their homes in the first 9 months of 2022. About 8% of mortgages taken out in 2022 are now underwater, with an additional 20% having low equity.
Black Knight found that excluding the 2020 government imposed pandemic moratorium
response, the ‘early-payment default’ (EPD) rate which tracks mortgage delinquencies within six months of origination, has hit its highest level since 2009 for FHA loans. 80% of homes acquired through FHA or VA loans have less than 10% equity.
U.S. homeowners lost a staggering $1.3 trillion in home equity in the Q3-2022 during a major slump in the housing sector, according to Black Knight. Home equity has plummeted during a rapid market correction. The equity losses in just three months were “by far the largest quarterly decline on record by dollar value and the largest since 2009 on a percentage basis,” according to Black Knight.
FHA Delinquencies Hit 2009 Levels