Part 12/16:
Homeowners who have built equity during this rise are in a good position; they might refinance or cash out for investments. Conversely, first-time buyers face higher barriers—down payments, higher prices, and rising mortgage rates.
Equity Levels Matter:
When homeowners have significant equity, they're less likely to walk away during downturns.
When equity is minimal or negative (as before the 2008 crash), default rates soar, causing broader economic fallout.
Home Price Growth vs. Wage Growth
The essential marker is affordability. Right now, home prices are climbing much faster than wages, meaning fewer people can afford to buy or stay in their homes. If this trend continues, it may trigger a correction—home prices decrease to match buyers’ income levels.