Homeowners are sitting on a staggering $35.1 trillion in equity—the highest ever recorded! This figure jumped by $1.7 trillion in just the last quarter and is up $3.1 trillion compared to last year, according to an analysis from Realtor.com using Federal Reserve data.
What does this mean? Simply put, as home prices rise, so does the equity homeowners have. Right now, equity makes up nearly 73% of all real estate value, a stark contrast to just 46% back in 2012 after the financial crisis.
While buying a home has become unaffordable for many, owning one is making homeowners wealthier on paper. Home prices rose 5% in July compared to last year. This trend is especially noticeable in cities like San Diego, Los Angeles, and San Francisco, where the rich keep getting richer.
Let’s talk numbers: the total value of homes owned reached a record $48.2 trillion, up by $1.8 trillion from last quarter and $3.5 trillion from last year. That’s more than double the total home value a decade ago!
But it’s not all sunshine and rainbows. Mortgage debt also rose to $13.1 trillion, although it’s lower than during the pandemic housing boom. Even if home prices were to dip, homeowners have enough equity to cushion that fall. The average equity stands at about $267,000. So, even with a 20% price drop, homeowners would still be sitting pretty with around 66% equity—better than during the mid-2000s.
What’s the takeaway? If you own your home and are making payments, you’re doing great! Million-dollar homes and thriving metros are a boon for existing homeowners, providing a solid safety net if they decide to sell or refinance. However, many are reluctant to sell, holding onto low mortgage rates or fearing they won’t find a comparable upgrade.
For first-time homebuyers, the struggle continues against rising home prices and stubbornly high mortgage rates. The landscape is tough, but for those already in the game, it’s a time of financial prosperity!
I’m a finance writer with three years of experience in investment analysis. At Investorwelcome , I translate complex financial concepts into clear, actionable insights to help investors navigate the market with confidence. Combining my solid academic background with practical industry knowledge, I’m dedicated to providing readers with accurate and timely information. My goal is to empower both new and seasoned investors by simplifying intricate data and offering strategic advice. When I’m not writing, I stay engaged with market trends and investment innovations to ensure my content remains relevant and valuable.
