According to Black Knight today’s homeowners have the highest level of “tapable equity” on record with tapable equity as defined as home equity below 80% of the value of their home. For example, if their home is worth $500k and they owe $300k on their home, they have $100k in tapable equity in their home.

Americans now have $5.4 trillion in tapable equity, which is 10% more than in 2005. Amazingly homeowners only took out $262 billion of their equity last year in cash out refinances or Helocs, which was just 1.25% of all home equity in the country. WOW!

But, the primary use for this cash was home improvement projects and Harvard is predicting that we will spend $340 billion this year remodeling our homes. And if people are spending big bucks to remodel their current home, they probably are not looking to sell their home and buy a new home. Thus, inventory levels will stay low for many years.