2021

Introduction

18.6%

Increase in home values nationwide on average.

The recent bull market in residential real estate has drawn tremendous attention from homeowners, prospective home buyers and investors. Over the past year, U.S. home prices have been surging at the fastest pace in four decades. As highlighted in a recent report by Unison, the secular imbalance of strong demand and limited supply for homes, and the high cost of raw materials for new construction, among other factors, have contributed to the strong growth in home prices. With incredibly strong demand for homes and housing supply significantly below the historical average, buyers are paying a premium above the listing price, which is a signal that growth of supply is not meeting demand. Moreover, new residential construction per person in the U.S. has been steadily decreasing, resulting in homeowners investing in their current home and building up equity as a preferable alternative to relocation.

According to the S&P CoreLogic Case Shiller Home Price Index, home values nationwide increased by 18.6% on average in June compared to a year ago. Across the country, all but 4 states have each seen a leap in home prices of more than 10% since last year. As reported by the U.S. Census Bureau, the median sales price of houses in the U.S. reached $374,900 in Q2 2021, compared to $322,600 in the previous year.

Millions of homeowners across the U.S. are benefiting from this unprecedented boom in home values. In Q1 2021, the total value of owner-occupied real estate jumped to $33.8 trillion, which outpaced the gradual increase in household mortgage debt. As a result, home equity, namely the difference between the home value and the outstanding mortgage debt, has grown significantly over the last year.

Today, U.S. households are sitting on over $22.7 trillion worth of home equity, after gaining $2.7 trillion from a year ago.

The question then arises: where in the country do homeowners sit on the highest home equity values?

Home equity values vary significantly across the country. Below is a heat map of the median home equity value across 50 states and DC. The highest median home equity values are seen in Hawaii, DC and California, more than quadruple those of typical homes found in states such as Illinois, Ohio and Oklahoma.

Winners – Top 20 Metros

Let’s dive deeper to look at the home equity values of the country’s largest metropolitan areas. More than 58% of Americans live within the 50 largest metropolitan areas, which is based on market demographics data from S&P Global. Each of these metros has a population of at least one million as of 2021.

California is absolutely unrivaled, claiming all top 4 major metropolitan areas with the most home equity. As of July 2021, the San Jose metropolitan area, home of Silicon Valley, boasts a whopping $950,000 median home equity value and a median home value of $1.33 million. The San Francisco metropolitan area, known for its high-tech fanfare and being the second largest financial center in the U.S., enjoys a $681,000 median home equity value and a median home value of $1.05 million.

Home Equity is home value minus mortgage debt

In July 2021, 49 of the 50 largest metros recorded an increase in median home equity values of over 10% from the previous year, with the exception of the Louisville/Jefferson County metro in Kentucky growing 9.7%. Homeowners across all these metros possess more home equity than ever before.

Across the large metros, the Phoenix metro area experienced an unparalleled 28.7% leap in median home equity, with a value increase of $42,000.

Home Equity is home value minus mortgage debt

Driven by strong housing demand and tight supply, aided by government support and near rock-bottom mortgage interest rates, home prices have not taken a hit during the COVID-19 pandemic. As a result, there have not been many notable decreases in home equity values in large metropolitan areas. Based on CoreLogic data, the Nashville metro area experienced a transient decrease, also known as a drawdown, of 1%, as home values briefly stalled between the second and third quarters in 2020, though the home equity values soon recovered in the subsequent housing boom.

Home Equity is home value minus mortgage debt

Outside the largest metropolitan areas, the spectrum varies further in terms of home equity changes. The California-Lexington Park metropolitan area in Maryland has seen the highest home equity increase, jumping 58% from a year ago.

Losers – Top 20 Metros

While the aforementioned metropolitan areas have scored high spikes in home equity values over the past year, smaller metros have not all enjoyed the same housing frenzy. Jacksonville, IL has seen a 19.5% drop in median home equity, or a value decrease of $15,000.

Percentage Growth in Median Home Equity

Home Equity is home value minus mortgage debt

About Unison

Unison is a San Francisco-based company that is pioneering a smarter, better way to own your home. Until now, the only way to finance a home was by taking on debt. Through home co-investments, we help homeowners access their equity flexibly with no monthly payments or interest. We enhance home affordability, reduce debt, and deliver a less risky way for homeowners, investors, and society to think about their most important asset – the home.