Home equity data and statistics: Why they matter to homeowners

You’ve been hearing a lot about home equity lately for one big reason: There’s a lot more of it. As home prices boomed throughout the pandemic, many homeowners enjoyed some massive appreciation in the size and worth of their ownership stake in their properties.

As of early 2024, the average mortgage-holding homeowner holds $299,000 in equity according to ICE’s Mortgage Monitor report. This figure is up from $274,000 at the end of 2022, and up even more significantly from $182,000 at the beginning of the pandemic, according to CoreLogic’s Homeowner Equity Insights report.

Let’s delve more deeply into home equity statistics — and why they’re significant to anyone who owns a home.

2024 homeowner equity data and statistics

Why is home equity important?

Home equity refers to the portion of your property that you own outright, free and clear of any debt (“equity” being financial lingo for “ownership”). Anyone who owns a home — whether purchased with cash or financed with a mortgage — has some level of equity in it. If you paid for your place all in cash or have paid off your mortgage entirely, you have 100 percent equity. Conversely, if you made a 20 percent down payment and borrowed all the rest for the purchase, you have only 20 percent equity at the start.

If your mortgage is still outstanding, your home equity is the difference between how much your house is worth and how much you have left to pay on your mortgage. If you still owed your mortgage lender $50,000, say, and your home’s value is $300,000, you’d have $250,000 in equity, approximately.

Understanding how much home equity you have can give you a rough idea of how much of the sales proceeds you’ll receive if you sell the property (after you pay off your mortgage and transaction costs, of course). You can also borrow against your equity stake with a home equity loan or a line of credit (HELOC). These products can help you pay for large expenses — they’re particularly popular to pay for home repairs and renovations — at a relatively lower interest rate compared to other forms of financing.

Despite the value of homeownership, 42 percent of Americans believe that now is a bad time to buy, according to Bankrate’s February 2024 Down Payment Survey. Increases in the cost of living and mortgage rates hold them back. However, real estate traditionally appreciates over the long term. So if you can qualify for a mortgage and scrape together a down payment — and there are programs to help you do so — it could behoove to become a homeowner sooner rather than later. Not only are you gaining a home, you’ll be making an investment.

Home equity over the past 5 years

To understand how home equity has changed over the past five years, consider the median price of a home in 2019: $258,000 according to ATTOM Data Solutions, a property database curator. In 2023, the median price reached an all-time annual high of $335,000. Though off the highs of $350,000+ in Q1 2022, that’s still a $77,000 increase since 2019. Going further back, the median home price has more than doubled since 2011.

In certain states, homeowners have seen especially large gains in their equity levels between Q4 2022 and Q4 2023. Here are where the biggest equity increases occurred, based on CoreLogic’s research:

• Rhode Island – $62,000
• New Jersey – $55,000
• Massachusetts – $53,000
• California – $49,000
• New Hampshire – $46,000

What increases home equity?

There are three basic ways to boost your home’s equity.

1. Continue making monthly mortgage payments

Every time you make a mortgage payment, you are chipping away at the loan’s balance (the part of the home your lender owns) and augmenting your equity (the part you own). At the start of your mortgage term, a greater percentage of your payments goes towards interest at first, but shifts more towards principal as the years go on. And the amount that goes toward principal translates to an increase in your equity stake.

2. Make home improvements

Renovations to your home — such as modernizing the bathrooms or adding an in-law suite — often enhances the property’s worth and marketability. Since the size of your mortgage doesn’t change — your lender doesn’t get to share in the home’s appreciation — this increase in value directly accrues to your side of the ownership stake.

3. Consider where you live

Your home’s equity can also increase without your intervention. As certain neighborhoods, cities and regions become more attractive, homeowners who already live there benefit, as the surge in interest and purchases elevates asking prices and property values in general.

What is negative equity?

Homeowners have negative equity — also known as being underwater or upside down — when they owe more on their mortgage than their home is worth. For example, if you had an outstanding loan balance of $250,000 and your home appraised for $235,000, you’d have negative equity.

It’s not a great state to be in. If you decided to sell the property, you wouldn’t make enough from the deal to pay off your mortgage. In fact, it would actually cost you money: Since your debt is bigger than the home’s value, you would have to make up the difference and pay your lender back at the closing.

Refinancing with negative equity is also a problem, because lenders usually won’t let you take out a new loan without any equity in your home. And forget about home equity loans or HELOCs: You can’t borrow against a non-existent stake. Instead, you may need to wait until your home value increases or until you’ve re-paid enough of your mortgage to reach positive equity again.

Negative equity isn’t a common issue these days, thanks to the huge growth in home values. In fact, in Q4 of 2023, the amount of homes upside down in their mortgage was down 15 percent year-over-year, according to CoreLogic — and at record lows: Just over 2 percent of all mortgages residences are underwater.

Final word on home equity facts and stats

Understanding how home equity works, and how to leverage it, is important for any homeowner. The potential to build equity is one of the primary reasons homeownership is so attractive to so many, and remains a steadfast part of the American Dream. Handing over rent money to a landlord every month does nothing to build your long-term wealth, but making monthly mortgage payments to a lender allows you to acquire an asset — an asset that you can eventually tap into or pass down to descendants.