Average Equity In U.S. Homes: Overview, FAQs

The average mortgage holder now has $315,000 in home equity

Fact checked by Timothy LiReviewed by Lea D. UraduFact checked by Timothy LiReviewed by Lea D. Uradu

Home equity in the United States is at an all-time record, with the average mortgage holder now owning $315,000 in home equity. That figure increased from $129,000 in 2019, fueled by a similarly rapid increase in house valuations. Year over year, homeowner equity is up by 8% for a national aggregate of $17.6 trillion.

The rise in average house valuations has encouraged some homeowners to sell their properties, but it has also led to increased demand for financial products that allow mortgage holders to access the equity in their homes. In this article, we’ll look at figures on average equity in more detail and explain what they mean for the average homeowner.

Key Takeaways

• The average amount of home equity in the United States is at a record high. The average mortgage holder now owns $315,000 worth of equity. 
• This increased by $129,000 since 2019. The rapid rise was partly driven by increased house price valuations over the same period.
• The recent rise in home equity means that many homeowners are now looking to access some of the money that they have invested in their houses. For some, that means selling their homes.
• For others, that means looking to financial products that can unlock equity: cash-out refinancing; home equity lines of credit (HELOCs); and reverse mortgages, often offered through what is called home equity conversion mortgages (HECMs). 

U.S. Average Home Equity

First, let’s take a look at the recent home equity figures in more detail. At the time of this writing, the most up-to-date figures on home equity available are those from the end of Q2 2024. In September 2024, research firm CoreLogic found that the average mortgage holder has $315,000 in accessible home equity—that is, the equity that mortgage holders can access while maintaining a 20% stake in their homes. This represents an increase in average equity of almost 8% over 2023 and means that there is currently $17.6 trillion in home equity held across the U.S.

This record rise in average home equity has been driven by a variety of factors. Housing valuations rose sharply in the years following the pandemic. However, these gains were not evenly distributed across the country. House price rises on the West Coast and in the Northeast have been most pronounced, with California and Northeastern borrowers seeing the strongest equity gains.

Despite record gains, some analysts have also suggested that house valuation prices will rise further over the next few years, pushing the average equity higher as well. CoreLogic expects to see a 2.3% housing cost increase between 2024 and 2025, while Fannie Mae estimates prices will decelerate until housing affordability improves.

Important

The average homeowner gained 8% in equity in 2024, with the average amount of equity in U.S. homes now standing at $315,000. Homeowner equity is now an aggregate $17.6 trillion.

Accessing Equity

This record rise in equity has encouraged many homeowners to access some of the money they have invested in their homes. 

For many, that means selling their home. However, homeowners also consider the possibility of future interest rate cuts before listing their homes. With interest rates expected to drop, the median housing price actually fell in the first few quarters of 2024. As of Sept. 2024, the median house price was $412,300.

For others, an increase in home equity has led to consideration of ways of accessing equity without moving house. Traditionally, there have been three ways of doing this: cash-out refinancing; home equity lines of credit (HELOCs); and reverse mortgages, most often offered through home equity conversion mortgages (HECMs). Data from the National Reverse Mortgage Lenders Association, for example, indicates that demand for reverse mortgages fell sharply in 2023 to 32,991 HECMs, down from 64,489 in 2022.

Are home equity loans tax deductible?

The interest paid on a home equity loan can be tax deductible if the proceeds from the loan are used to “buy, build, or substantially improve your home.” However, with the passage of the Tax Cuts and Jobs Act and the increased standard deduction, itemizing to deduct the interest paid on a home equity loan may not lead to savings for most filers.

What is a good amount of equity in a house?

It’s advisable to keep at least 20% of your equity in your home, as this is a requirement to access a range of refinancing options. Borrowers generally must have at least 20% home equity to be eligible for a cash-out refinance or loan, for example. Sometimes, this is expressed as having an 80% loan-to-value (LTV) ratio of the home’s current value.

How much equity do U.S. homes have?

Nearly one in two U.S. mortgaged residential properties—49.2%—was considered equity rich (meaning that the combined estimated amount of loan balances secured by those properties was no more than 50 percent of their estimated market values) in the second quarter of 2024. That matches the percentage from the same quarter of the previous year.

The Bottom Line

The average amount of home equity in the U.S. is at a record high. The average mortgage holder now owns $315,000 worth of equity, increasing by $129,000 since 2019. This rapid rise was partly driven by increased house price valuations over the same period.

The recent rise in home equity means that many homeowners are now looking to access some of the money that they have invested in their houses. For some, that means selling their homes. For others, that means looking to financial products that can unlock equity: cash-out refinancing, HELOCs, and reverse mortgages, most commonly offered through HECMs.

Read the original article on Investopedia.