Households’ Aggregate Home Equity Rose Over the Year


According to the Federal Reserve Board’s fourth quarter of 2015 release of its Financial Accounts of the United States report, household holdings of real estate, measured on a not seasonally adjusted basis, totaled $22.029 trillion in the fourth quarter of 2015, $1.255 trillion higher than its level in the fourth quarter of 2014, $20.774 trillion. At the same time, home mortgage debt outstanding, $9.491 trillion in the fourth quarter of 2015, rose by $90.0 billion over the same four-quarter period. Since the total value of household-held real estate rose faster than the aggregate amount of mortgage debt outstanding, then home equity held by households grew. Over the year, total home equity held by households grew by $1.165 trillion, 10.2%, to $12.539 trillion. Household’s home equity is now 56.9% of household real estate.


As housing equity continues to grow, the proportion of households underwater continues to shrink. A household is considered underwater when the total value of the property is less than the total value of the debt(s) underlying that property. The increase in the proportion of households with positive equity will improve their ability to sell their home and purchase a new one.

As illustrated by the Figure above, between the fourth quarter of 2012 and the fourth quarter of 2015, the total amount of household equity has grown from $8.1 trillion to $12.5 trillion. This increase represents a gain of 55%. Meanwhile, over the same time period, the share of households underwater fell from 21.6% to 8.5%, a decline of 13.1 percentage points.

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