From the NYT:
Rising home prices are raising equity levels, and homeowners are cashing in on these gains.
In the first three quarters of this year, the sales volume of single-family homes and condominiums reached the highest level since the same period in 2006, according to RealtyTrac, a provider of property data. Homeowners who sold during the third quarter also reaped the highest price gain in eight years — an average of 17 percent over their purchase price, or $40,658.
Other data shows that homeowners are taking advantage of rising values by refinancing their mortgages in order to cash out a portion of their equity.
The group of homeowners that RealtyTrac categorizes as “equity rich,” meaning they have at least 50 percent equity in their homes, has been increasing over all, said Daren Blomquist, a vice president of RealtyTrac.
But in the third quarter, the share declined from the quarter before, to 19.2 percent of all homeowners with a mortgage from 19.6 percent. The group with less than 50 percent equity, however, grew, while the ranks of those with negative equity shrank.
“What that tells me,” Mr. Blomquist said, “is that people are either selling and moving into a bigger home, or refinancing it and leveraging some of that equity, so they don’t have as much equity in the home as they did before.”
Refinancing activity in general has risen in recent months, as interest rates have remained low. In September, refinanced loans represented 42 percent of lenders’ loan volume, according to Ellie Mae, a software provider for the mortgage industry. That was a 5 percent increase over August, and the highest level since May.
In many mid- to high-end housing markets, rising home prices have made it difficult for existing homeowners to move up, said Norman T. Koenigsberg, the president and chief executive of First Choice Loan Services in East Brunswick, N.J. As an alternative, he said, “families are tapping into their equity to improve their homes, either as a long-term strategy or to enable them to resell it sooner at a greater profit.”