U.S. homeowners hold more than $15 trillion in home equity as of the end of 2018. A quick look at how that number has changed over time and how it’s calculated reveals a lot about the economy. If you take the grand total of mortgage debt and subtract that amount from the aggregate worth of all residential real estate, you get the amount of equity U.S. citizens hold in their homes. The 2018 number is an all-time high and has steadily increased, year after year, since 2008.
But one grand statistic can’t really tell us much about how many people own their homes and what the average amount of equity is. That data, along with a few other instructive stats about U.S. home ownership help to paint a more complete picture:
- Ownership Percentage: Currently, about 64 percent of people who reside in homes also own those structures, or are paying on a mortgage toward full ownership. That rate fluctuates a bit from year to year but generally falls within the 63-68 percent range.
- Average Equity: Since WWII, the amount of home equity for the average homeowner has steadily fallen. Nowadays, the average U.S. homeowner’s equity represents less than one-half of the value of the home.
- Older Owners: Independent of equity amounts, there’s another trend in home ownership. The average age of owners is going up. Experts believe this is the direct result of couples marrying and starting families later that in the past.
Other Trends in Home Ownership
Compared to adults who rent their living spaces, homeowners tend to have higher incomes and are more likely to be married and have children. Here are a few other important facts to examine when studying the U.S. housing market:
- The official Census Bureau definition of the term “home ownership rate” is calculated by dividing the number of owner-occupied homes by the number of residential houses in the U.S. If, for example, there were 20 million owner-occupied homes among 50 million residential houses in existence, the home ownership rate would be 20/50, or 40 percent.
- The last year for which complete statistics are available, 2016, the average price tag on a U.S. home was $187,000.
- Among millennials, who are defined as people aged 25-34, the home ownership rate is only 37 percent. That’s far lower than the average of 64 percent for the entire U.S.
- Surprisingly, about one-third of all homeowners have 100 percent equity in their homes. In other words, they either never had a mortgage or have paid it off entirely.
- The median dollar amount of a U.S. mortgage payment is $1,030. For the average homeowner, that monthly payment represents about 15 percent of income.
- As of early 2019, the range of mortgage interest rates is pretty wide, with a low of 3.5 percent and a high of 7.8 percent. To get a better idea of what this means, it helps to zoom in on the average rate for a standard, 30-year, fixed-rate mortgage. That number is on the lower end of the rate range, sitting at 4.49 percent.
In the Middle Ages, there were two kinds of loans: living pledges and dead pledges. In a dead pledge loan, if a borrower defaulted, the lender could take possession of the property without having to pay the borrower back for whatever amount of equity had been built up. The term “dead pledge” in Latin is “mort-gage.”