As the novel coronavirus took hold in the second quarter, households’ market values continued to rise, per second quarter 2020 Federal Reserve Flow of Funds report.
In the second quarter, the aggregate value of all household mortgages rose by $80 billion to $10.6 trillion, while the aggregate value of the households’ market values, i.e., that of all owner-occupied real estate including vacant land and mobile homes, increased by $450 billion to $30.8 trillion. The result was an increase in net equity by $370 billion to $20.2 trillion. In the previous quarter, net equity stood at $19.8 trillion.
A recent study by the Federal Reserve showed that among the various categories of expenditures spent from “equity extraction”, the highest included home improvements and home maintenance. Such residential investment bodes well for future values of the homes.
It is also worth noting home equity loans and lines of credit (HELOCs). Home equity loans and HELOCs are forms of closed-ended and open-ended credit, respectively. In the second quarter of 2020, home equity loans in the U.S. decreased by a total of $83.8 billion, of which $61.2 billion was a decrease in lending by U.S. banks. On one-to-four-family residential mortgages, a category which includes property on farm houses, holdings of home equity loans and HELOCs decreased by a combined total of $21.2 billion to $474.1 billion.