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Home equity loans rise 60% in metro Detroit

Charles & Adrienne Esseltine / Flickr


The Detroit region may still have plenty of housing woes.  But a new report issued by RealtyTrac indicates that for a good number of people living in the area, the housing market is recovering.

RealtyTrac issued its first-ever report on home equity loans this week.   Consumers take out loans using their home equity as collateral.   Typically people spend the money on home remodeling projects.

Nationally, home equity loans rose nearly 21% in the past year.  In Detroit, home equity loans rose 59.3%.

RealtyTrac Vice President Daren Blomquist says there are increasing signs of health in Detroit, including a much lower number of foreclosed homes flooding the market.

"Home prices have been coming up in the Detroit market, " says Blomquist, "And so with the rise in home prices that we've been seeing over the last couple of years, that has enabled some people at least to regain quite a bit of equity."

Blomquist says he sees no signs of a return to 2006-2007, when many lenders were approving home equity loans in excess of 125% of the value of their homes. 

"People were taking out equity that they didn't even have, anticipating that home prices would continue to go up at the rate they were going up.  I don't think we're going to see those types of loans return any time soon."

One big reason Blomquist thinks those loans aren't coming back: the Dodd-Frank Act requires lenders to keep highly risky loans on their own books, rather than packaging them and selling them to other entities.

Tracy Samilton covers energy and transportation, including the auto industry and the business response to climate change for Michigan Public. She began her career at Michigan Public as an intern, where she was promptly “bitten by the radio bug,” and never recovered.