America’s homeowners are sitting on a significant pile of cash that has increased by an aggregate 8% year-over-year.
A new report shows that equity for the roughly 62% of homeowners who have a mortgage increased in the second quarter of 2024 by $1.3 trillion, taking the total net equity in their homes to $17.6 trillion.
However, the Homeowner Equity Report from CoreLogic reveals that the average homeowner’s equity increased by $25,000 year-over-year, down from $28,000 in the first quarter.
Of course, the nature of the US residential real estate market means that there were winners and losers, with the largest rise in home equity centered on the Northeast states. Owners in Maine saw the largest increase at $57,500, followed by California ($55,300) and New Jersey ($52,600).
But three states saw annual equity losses, with homeowners in North Dakota seeing the largest average decrease in their equity (-$8,400) followed by Oklahoma (-$7,700), and Texas (-$2,600).
“Persistent home price growth has continued to fuel home equity gains for existing homeowners who now average about $315,000 in equity and almost $129,000 more than at the onset of the pandemic.” said Dr. Selma Hepp, chief economist for CoreLogic. “The substantial accumulation of home equity for existing homeowners has served as an important financial buffer in times of uncertainty, as some homeowners facing higher costs of homeowners’ insurance and taxes and have had to tap into their equity to prevent falling behind on their mortgages.”
This financial resource has helped keep mortgage delinquencies at historic lows even as inflation and interest rates posed challenges to homeowners’ finances. Although recent research suggested some may be using home equity in risky ways by using it for short term experiences or for investments.
There are some owners in the unfortunate position of owing more on their mortgage than their home is worth, but the number has decreased over the past year to around one million or 2% of all mortgaged homes.
The CoreLogic HPI Forecast TM projects that home prices will increase by 2.3% from June 2024 to June 2025.
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