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As Home Values Soar, Americans Are Sitting on Record High Home Equity
By Leslie Cook MONEY RESEARCH COLLECTIVE
On average, today’s homeowners could tap into about $206,000 per mortgage.
After years of soaring home prices, owners are now sitting on record amounts of equity — trillions of dollars of which they can tap into if needed.
According to a new report by data analytics firm Intercontinental Exchange (ICE), American homeowners with mortgages held nearly $17 trillion in home equity during the first quarter of 2024 — a new record high. What’s more, $11 trillion of that equity is tappable, meaning the homeowner can cash out a portion of their home’s value while maintaining a 20% equity stake in their homes.
On average, these homeowners can tap into about $206,000 per mortgage. The impact of this possibility on household finances could be significant. ICE estimates that about 48 million homeowners have some amount of tappable equity, which they can access through a home equity loan or a home equity line of credit (HELOC).
These loans — sometimes also referred to as second mortgages — have lower interest rates than other types of credit, like personal loans and credit cards. They don’t require refinancing the original loan and can be used to pay off higher-interest debt or unexpected expenses. Two-thirds of all tappable equity is held by consumers with credit scores of 760 or above, making them low-risk for lenders, too.
For these high-quality borrowers, “second-lien equity products remain a particularly attractive option for tapping housing wealth without sacrificing a once-in-a-lifetime low rate on their existing mortgage,” said Andy Walden, vice president of enterprise research strategy at ICE, in a press release.
Home equity gains buoyed by booming market
Recent housing market dynamics fueled the boom in home values over the past few years. One outcome of the pandemic was record-low mortgage rates, which set off a homebuying frenzy. Add in the fact that inventory was already low, and the net result is soaring home prices.
Even though mortgage rates are about double their pandemic-era average and buyer demand has cooled over the past two years, there hasn’t been a significant slowdown in price growth.
Data from the National Association of Realtors shows that home prices increased in more than 90% of the country’s metro areas during the first three months of the year. According to Realtor.com, the median listing price moved up to $424,900 in March, up from $415,500 in February. (In March 2020, before the pandemic hit, the median listing price was $320,000.) Overall, home prices have doubled in many markets over the past decade, significantly increasing homeowner wealth.
It’s a challenging environment for aspiring homebuyers, and not only due to high prices. “We’re still very much in a hole from an inventory perspective,” Walden said. The situation is quite different for owners who are interested in selling a house or perhaps tapping their equity: “For existing homeowners, the picture keeps growing brighter.”
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Leslie Cook is Money's lead real estate editor, covering news stories about mortgages and how rate movements affect the housing market and writing and editing stories that inform our readers about real estate trends and how they affect homebuyers and sellers. Leslie writes a weekly newsletter, Money Moves, that covers a wide range of real estate topics in addition to her weekly articles. Her work has been featured on Apple News, MSN and ConsumersAdvocate.org. Leslie has been covering the mortgage and real estate industry at Money since 2019 and has interviewed industry leaders, such as Lawrence Yun, chief economist at the National Association of Realtors, and Glenn Kelman, CEO of brokerage Redfin. She has been a guest on the This Morning with Gordon Deal radio show, interviewed by The Mortgage Note, and served as moderator for ServiceLink’s State of Homebuying webinar. While at Money, Leslie has contributed to several of Money’s rating and ranking features, including Best Places to Live, Best Places to Travel and Changemakers. She has also played a major role in researching and selecting Money’s Best Banks rankings for the past four years. Before joining Money as a staff writer, Leslie was a reporter for Caribbean Business Newspaper in San Juan, Puerto Rico, covering human resources, telecommunications and computers. She graduated cum laude from Bryn Mawr College in Pennsylvania with a bachelor’s degree in history. The research and interviewing skills learned there have contributed to Leslie’s ability to provide accurate information on her area of expertise and elicit informative responses from her interviewees.