Real Estate Market Values Surge in the First Quarter


The latest results from the Federal Reserve’s Z.1 Financial Accounts of the United States, i.e., the “Flow of Funds”, show that, in the first quarter of 2021, the aggregate market value of all owner-occupied real estate in the United States registered the largest numerical quarterly increase in the last 20 years’ worth of data. From $32.84 trillion in the fourth quarter of 2020, real estate rose by $0.94 trillion to $33.78 trillion. The market has been bolstered immensely by nationwide home price appreciation, which only overheats it even more.

On the liabilities side of real estate’s balance sheet, home mortgages rose by $120 billion in the last quarter to $11.04 trillion. In terms of the scale of increases, the real estate assets are increasing much faster than real estate liabilities. The change in the value total home mortgages owe to the combination of more mortgages being undertaken by prospective homeowners and the aggregate unpaid principal balance of all mortgages being paid down. Per the Mortgage Bankers Association’s latest assessment, the share of home loans in forbearance is currently 4.16%, an important data point to consider as the American economy reopens from the pandemic and many Americans exit the financial hardship they had previously experienced under COVID-19’s stranglehold on the economy.

Meanwhile, aggregate owners’ equity, that is the difference between the market value of all owner-occupied real estate and the aggregate value of home mortgages increased in the latest quarter to $22.7 trillion, or 67% of all household real estate, the highest share since 1989. This high share speaks more broadly for all homeowners as a good time to refinance their existing loans, which the Mortgage Bankers Association’s recent weekly survey data reflect.

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