Homeowner Equity Statistics 2023-2024
- US homeowner equity as a percentage of household real estate rose to 65.87% in 2022-2023.
- 2023 US homeowner equity increased by $1.5 trillion in the fourth quarter year over year.
- Homes with a mortgage gained $26,300 in equity during the last three months of 2020 versus a year earlier.
- In October 2022, the number of cash-out refinance mortgages surged by 33%
- In the fourth quarter of 2022, US homeowners with mortgages comprise 62% of all properties.
- The wealthiest 10 percent of homeowners own 45% of home equity.
- Year over year, negative equity for mortgaged residential properties fell by 28.9%
- The boom in the housing market entered its tenth straight year in 2021-2022
US Homeowner Equity Facts and Stats 2022-2023
According to the Statista Research Department, US homeowner equity as a percentage of household real estate rose to 65.87 percent in 2020. The real estate industry calculates home equity value by subtracting the amount of mortgage debt remaining from the property’s market value. The homeowner earns equity as they pay off their mortgage. Each timely payment has a positive effect on the credit score and credit report of an individual with bad credit by showing an on-time payment to a creditor.
A recent report from CoreLogic states that 2020 US homeowner equity increased by $1.5 trillion in the fourth quarter year-over-year, says New American Funding. Those numbers mean a good thing – that the average US homeowner has accrued equity of more than $200,000. The equity increase stems from a more than 10 percent rise in home prices in the fourth quarter. The rise in home value means that they paid the typical amount on their mortgage but enjoyed an increase in home value above their purchase price. Payments to a mortgage can also positively influence those with bad credit since it decreases the individual’s debt-to-credit ratio, also called your credit utilization rate. That means you owe less and have more open credit, which creditors like.
According to US News and World Report, the hot US housing market has helped raise the value of the homes of many homeowners. The increase in equity value adds to their net worth, which helps them even if they don’t want to sell their home. Real estate information company CoreLogic says, on average, homes with a mortgage gained $26,300 in equity during the last three months of 2020 versus a year earlier in states like Virginia, Arizona and Alabama. They can draw on their home’s equity in numerous ways.
Some Americans did cash in on their increased home equity, reports Forbes, using cash-out refinancing. That method of home loan lets them refinance their mortgage and take a lump-sum payment from the deal. The lump-sum typically equals between 75 and 85 percent of the home’s equity, which the individual can use in essentially any way they want. If a person with bad credit wants to pay off their debts, they can use a cash-out refinancing mortgage as a consolidation method. They could end up with a better interest rate on their remaining mortgage, too. In October, the number of cash-out refinance mortgages surged by 33 percent, according to data from Black Knight Inc. During the second quarter of 2021, US home equity hit a record $23.6 trillion, according to Federal Reserve data. That’s nearly twice the value of the 2006 real estate boom.
According to property information provider CoreLogic in its Home Equity Report, in fourth-quarter 2020, US homeowners with mortgages comprise 62 percent of all properties, reports Business Wire. That means the year-over-year equity increase of 16.2 percent, benefits typical homeowners, rather than the wealthiest households in the US. The wealthy typically have good or great credit, so this means that the increase in home value and home equity helps those with less than superb credit.
As the Washington Post explains, the wealthiest 10 percent of homeowners own 45 percent of home equity. While that does comprise nearly half of the US home equity statistics, it also means that more than half of that measure of wealth belongs to those of middle or lower classes who don’t typically amass stock wealth. Homeowners who were Caucasian or African-American fared best in equity growth although more than 30 percentage points separated them.
Household Home Equity Data Trends 2021-2023
Another measure of economic strength also improved – the amount of negative equity, states Core Logic. Negative equity, also called an underwater mortgage, refers to when a property’s market value drops below the outstanding mortgage amount. Year over year, negative equity for mortgaged residential properties fell by 28.9 percent. In the previous year, it had been 1.6 million homes. That translates to nearly one-third of the nation’s less valuable homes rising in value. The fact that individual homeowners did not have to pay more money into the mortgage to earn the equity helps them with their bad credit since their home increased in value without them needing to put in sweat equity. They did not need to make repairs or address the home’s curb appeal to have it increase in value. That left them with funds to pay down loans.
Both the spike in home equity and the decrease in underwater percentages provide evidence that the US housing market resisted damage from the Coronavirus pandemic. The boom in the housing market entered its tenth straight year, reports Atom Data. That points to a strong economic market that continues to perform well despite the COVID-19 pandemic.