The latest results from the Federal Reserve’s Z.1 Financial Accounts of the United States, i.e., the “Flow of Funds”, show that the aggregate value of all home mortgages of households and nonprofit organizations in the United States in the third quarter of 2021 registered the largest post-Great Recession numerical quarterly increase. From $11.3 trillion in the second quarter of 2021, household liabilities rose by $230 billion to $11.5 trillion. Both the current quarter and the previous quarter’s numerical increases in the aggregate value of home mortgages were outsized compared to all previous quarters since June 2009.
Despite the gain for mortgages, equity is rising faster. On the assets side of the balance sheet, the aggregate market value of all owner-occupied real estate increased to $36.8 trillion from $35.5 trillion the previous quarter.
The continuing spike in the market value of owner-occupied real estate is due to the dramatic, but unsustainable, increase in home orices occurring across the nation. Mortgage debt is rising on the growing volume of home sales, particularly among younger households.
It is worth noting that the Flow of Funds data are not seasonally adjusted. Also, as in prior releases, the current Z.1 report included revisions to earlier quarters’ estimates. In the current quarter, there were upward revisions to a few recent, prior quarter real estate aggregate market values, while the liabilities showed relatively small revisions.
Finally, 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 $25.3 trillion, or 69% of all household real estate, the highest share since 1989.