Total Equity on mortgaged properties currently stands at $9.8 trillion, $5.9 trillion of which is tappable. This indicates a drop of $140 billion in the third quarter of 2018, while also illustrating that 272,000 fewer homeowners have tappable home equity available in Q3 when compared with Q2. This is according to a new study released by homeownership data firm Black Knight, Inc. (NYSE:BKI).

The average homeowner who has at least 20 percent equity in their home has approximately $136,000 in Tappable Equity, which also represents a drop of about $2,300 compared with Q2 2018, according to the study’s findings. A decline in equity affected 60 of the nation’s largest 100 markets in the third quarter, with the study detailing that losses were driven by “softening home prices in the most equity-rich among them.”

The total decline in equity can be attributed solely to the state of California, with the study indicating that state’s responsibility for “nearly 75 percent of the total decline in tappable equity, as markets continue to react to rising interest rates and tightening affordability.”

This occurrence marks “the first decline we’ve seen since the housing recovery began, and its cause can be traced directly to softening home prices in some of the nation’s most expensive – and equity-rich – markets,” said Ben Graboske, executive vice president of Black Knight’s Data & Analytics division.

In terms of the drops observed in California, three specific markets accounted for 55 percent of the total net decline: San Jose, San Francisco and Los Angeles. “Add Seattle into the mix, and you see that just four markets were behind two-thirds of the net reduction in tappable equity,” Graboske said.

Comparing the available, tappable equity to Q3 of last year paints a slightly more positive picture.

“There is still $9.8 trillion in total home equity in the market, some $5.9 trillion of which is tappable. That’s $571 billion more than in Q3 2017, and tappable equity remains near an all-time high,” Graboske said. “It’s also important to remember that in general third quarters are relatively flat as far as home prices are concerned, and that tappable equity is up on an annual basis in 98 percent of major metro areas.”

Find the full report at Black Knight.

Written by Chris Clow