U.S. Housing Values - & Home Equity - Continues to Rise

The third quarter Federal Reserve Flow of Funds report showed continued improvement in the financial position of U.S. households who own real estate with the market value of all owner-occupied residential real estate (household owned) rising to $25.6 trillion. This figure is up by $298 billion when compared to the second quarter of 2018 and up by $1.53 trillion versus the third quarter of 2017.

Of equal, if not greater, interest to me is that mortgage liability only rose by $276 billion year over year. With slower increases in debt and rising home values, the Federal Reserve now calculates that homeowners have $15.4 trillion in home equity (up $207 billion over Q-2 and up by $1.25 trillion versus a year ago. The value of owners’ equity in real estate as a percentage of household real estate reached 59.9% in the third quarter, a level not seen since 2002.

Owner-occupied real estate (including vacant land and mobile homes) at market value reached and surpassed the highest ever seen prior to the recession, which was $22.64 trillion in Q-2 2006. The break-even occurred in the fourth quarter of 2016. Thus, both in terms of market value, and owners’ equity as a percentage of market value, households’ balance sheets have now reached pre-recessionary levels.