Gimme A Slice With Pepperoni And Some Home Equity - InvestingChannel

Gimme A Slice With Pepperoni And Some Home Equity

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Even Cheap Food Is Getting More Expensive

Eating out in Los Angeles these past couple weeks, The Juice has experienced some sticker shock. 

Up until a few months ago, our favorite taco truck – Leo’s Tacos – sold their amazing street tacos (get the al pastor!) for $1.50 each. Last month, the price climbed to $1.75. Just last week, Leo’s raised the price per taco to $2.00. 

Also last week, two beers and a 16-inch cheese pizza at a local New York style pizzeria in LA set us back about $36 before the tip! 

In San Francisco, some places are charging up to $6 for a slice with pepperoni. One popular pizzeria there just increased prices 15% across the board, bringing a slice with toppings to $4.96. 

No surprise given what we told you last week. Inflation has hit the main components of pizza making super hard:

  • Flour: +22.7%
  • Cheese: +12.6%
  • Sauces and gravies: +16.1%

But it’s not just the actual ingredients. A 20-inch pizza box that cost $0.62 in 2021 goes for $1.56 now. A 152% increase. 

Speaking of New York City, if you live there or visit frequently, let us know. Is the $1 slice still a thing? 

Our research team could find just one story – from late July – of a Manhattan pizzeria keeping their slice at a buck despite overall costs roughly doubling. $1 Pizza Slice on Ninth Avenue. Hell’s Kitchen. Go check it out for us.

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Gimme A Slice With Pepperoni And Some Home Equity

Key Takeaways:

  • US households have impressive – and tappable – equity in their homes. 
  • And they’re starting to access it through home equity loans and lines of credit. 
  • Good news for banks, such as BofA. We’ll wait and see how it impacts consumers and the economy. 


The Juice continues to track the increasing debt loads – from mortgages to credit cards – US households appear to be taking on. So far, most people are paying these obligations off on time.

Another type of debt we’re following – home equity lines of credit (HELOC). Out of favor for some time, they’re back and on the rise. 

Hardly surprising. 

If you’re suddenly paying more for everything and you find yourself house rich, but cash poor, it has got to be tempting to tap that equity. 

So let’s update things with the most recent data. 

Honey, We’re Rich! House Rich.

According to housing researcher, Black Night, the amount of equity people have in their homes hit a record high for the tenth consecutive time in Q2

… tappable equity – the amount available for homeowners to access while retaining at least 20% equity in their homes – hit another record high, climbing to $11.5T, up $500B (+5%) from Q1 and $2.3T (+25%) from the same time last year.

Equity-rich homes with a mortgage increased to 48.1% in Q2. That’s up from 44.9% in Q1 and 34.2% in Q2 of 2021. Only 1 out of 34 residential mortgages were considered seriously underwater in Q2 of this year. So existing homeowners – especially the ones who secured low rates prior to 2022 – are sitting pretty.  

As home prices come down, so will home equity, however it’s still something to keep an eye on. Because, with all of this equity, an increasing number of people are taking out HELOCs. 

Tapping That Equity To Pay For Pizza? 

An increasing number of house rich folks are tapping that equity. 

For example, at Bank of America (BAC), total home equity originations (loans and lines of credit) hit $4.6 billion, as of the six months ending June 30, 2022. That’s up from $1.7 billion in the same timeframe last year. A 171% increase. Between Q1 and Q2 of this year, home equity originations increased roughly 24%, from $2 billion to $2.5 billion.  

That’s welcome news for BAC. This fresh home equity lending helps offset a 13.2% decrease in first mortgage originations during the same period. Between the first two quarters of 2022, first mortgage activity is down 11.5%. 

Meanwhile, credit bureau TransUnion reports that home equity lines of credit and home equity loans were up 41% and 29%, respectively, year-over-year, as of Q1 2022. 

The Bottom Line: As the graph indicates, overall home equity originations are down so far this year. However, this is because of the decreasing popularity of cash-out refinancing, due to high interest rates. Amid record home prices, there’s all of this equity, making HELOCs and home equity loans the options of choice to secure some extra cash on the back of your dwelling. 

What are these homeowners doing with the money? 

We can only assume some are making upgrades. Remodeling. In fact, renovation spending appears to be headed for record highs by the end of the year. 

However, given overall inflation and the cost of a slice of pizza (!), some of this equity turned into cash in the bank could be going to cover everyday expenses and/or discretionary spending. 

The Juice will keep our eyes on both sides of this housing meets debt coin and update the situation accordingly.


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