{"id":2662,"date":"2025-09-04T21:56:19","date_gmt":"2025-09-04T21:56:19","guid":{"rendered":"http:\/\/ft365.org\/index.php\/2025\/09\/04\/what-being-equity-rich-means-for-homeowners-bankrate\/"},"modified":"2025-09-04T21:56:19","modified_gmt":"2025-09-04T21:56:19","slug":"what-being-equity-rich-means-for-homeowners-bankrate","status":"publish","type":"post","link":"https:\/\/ft365.org\/index.php\/2025\/09\/04\/what-being-equity-rich-means-for-homeowners-bankrate\/","title":{"rendered":"What Being Equity Rich Means For Homeowners | Bankrate"},"content":{"rendered":"
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Key Takeaways<\/span> <\/span> <\/h2>\n
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  • Home values have consistently hit record highs in recent years, which has created a surge in more equity-rich homeowners. <\/li>\n
  • To be considered \u201cequity rich\u201d, a property\u2019s outstanding mortgage balance should be less than half of its market value. <\/li>\n
  • Being equity rich makes it easier to get financing, like HELOCs and home equity loans, and on better terms. <\/li>\n<\/ul><\/div>\n

    Owning a home has long been considered one of the best pathways to building wealth. Homeowners\u2019 median net worth is around $396,500 \u2013 significantly higher than the $10,410 median net worth of renters, Federal Reserve data shows. The single biggest asset most people have is their home.<\/p>\n

    However, not all homeowners are equally wealthy. Some aren\u2019t just rich, but equity rich: They own more of their house than they owe on it (with their mortgage). Nearly half of mortgaged residential properties in the U.S. now fall in the equity-rich category \u2013 close to double what they were just five years ago, according to a new report by real estate data analyst ATTOM.<\/p>\n

    What\u2019s behind the rise of the equity rich \u2013 and what does it mean for homeowners who\u2019ve joined their ranks?<\/p>\n

    What does equity rich mean?<\/h2>\n

    \u201cEquity rich\u201d is an industry term used by real estate analysts and mortgage professionals. To consider yourself equity rich, you need to have an equity stake of 50 percent or more in your home\u2014meaning your outstanding mortgage balance is less than half the home\u2019s fair market value.<\/p>\n

    For example, let\u2019s say your home appraises for $500,000. If you owe $250,000 or less on your mortgage, you\u2019re equity rich. Determining equity rich status is not <\/i>about how much you paid when you purchased your home. Instead, it relies on knowing how much your home is currently worth.<\/p>\n

    According to the latest figures from ATTOM, 47.4 percent of all mortgaged residential properties in the U.S. fell under the \u201cequity rich\u201d label at the close of the second quarter of 2025. That\u2019s quite a difference compared with five years ago: In Q2 2020, just 27.5 percent of properties had reached equity-rich status.<\/p>\n

    What\u2019s behind the rise in equity-rich homes?<\/h2>\n

    There are two basic ways to accumulate home equity: Your property\u2019s mortgage debt decreases, and\/or your property value increases. The recent surge in equity-rich properties isn\u2019t due to loads of thrifty homeowners prepaying their mortgage principal (though many doubtless are). Instead, it\u2019s the housing market that is creating more equity-rich homeowners.<\/p>\n

    The trend can be traced to the pandemic\u2019s impact on residential real estate. Home prices and values rose at a fast clip between 2020 and 2022, much faster than mortgage debt \u2013 and they\u2019ve kept on rising even as the pandemic ebbed. The median price of a home in the U.S. increased from $317,100 in the second quarter of 2020 to $410,800 at the end of Q2 2024, according to data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.<\/p>\n

    As a result, home equity stakes have risen to unprecedented amounts. Total home equity in mortgaged properties is $17.8T, according to data analyst ICE Mortgage Technology. Their owners can access an average of $213,000.<\/p>\n

    What is the significance of being equity rich?<\/h2>\n

    The biggest upside of being equity rich is fairly straightforward: a stronger financial profile and higher net worth. You have an asset that\u2019s worth more (and that\u2019s more valuable to bequeath to heirs). And you\u2019re likely to profit more: If you sold your home tomorrow, you\u2019d have less mortgage debt to settle, letting you keep more of the sale proceeds.<\/p>\n

    Speaking of mortgages, you\u2019re in a better position to take out a second one \u2013 to tap your property\u2019s value via a home equity loan or a home equity line of credit (HELOC) \u2013 when you have a sizable ownership stake. More equity means more borrowing power. That not only means a bigger loan or credit line, but better terms as well.<\/p>\n

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    Home Equity Icon<\/title> <\/svg> <\/p>\n
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    From home improvements to consolidating high-interest debt, there are numerous reasons to tap your home equity for cash<\/u>. But it\u2019s an obligation to take seriously, since your home will act as collateral: MIss too many payments, and the lender can foreclose on the property.<\/p>\n<\/p><\/div>\n<\/p><\/div>\n

    Are there any drawbacks to being equity rich?<\/h3>\n

    There\u2019s clearly plenty to celebrate if you\u2019re equity rich. But there are some additional considerations to keep in mind:<\/p>\n

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    • If your home is worth more, owning it will likely cost more, too.<\/strong> As home values have risen, so have homeownership costs \u2013 everything from property taxes to homeowners insurance premiums to maintenance expenses. Not surprisingly, states with the highest home prices tend to have the highest home costs, too, as Bankrate\u2019s Hidden Costs of Homeownership Study found. <\/li>\n
    • All that equity isn\u2019t going to be yours to keep. <\/strong> Being equity rich can be a bit deceiving, notes Sebastian Frey, a broker with Compass in the Bay Area of California. For example, consider someone who has amassed a $1 million equity stake in their home. It\u2019s only a paper amount until you actually sell the property and, even then, \u201cthat does not equal $1,000,000 in cash,\u201d Frey says. \u201cA typical homeowner with $1,000,000 in gain, even if sold as a married couple, would result in a cost of sale of close to $200,000 considering expenses for home preparation, marketing, sales commissions, and capital gains tax.\u201d <\/li>\n
    • Values change all the time \u2013 which means your equity does, too. <\/strong>Being equity-rich doesn\u2019t necessarily mean staying <\/i>equity-rich \u2013 especially if a serious deflation of your local real estate market occurs. For example, ATTOM\u2019s latest figures show that the percentage of equity-rich homes in Florida decreased by more than seven percentage points over the past year. Arizona, Georgia, Colorado and Washington all posted declines in the number of equity-rich homes, too. With that in mind, if you are carrying a big home equity loan and<\/em> a large mortgage, you could wind up owing more than the property is worth should a recession occur.<\/li>\n<\/ul>\n

      Will more homeowners become equity-rich soon?<\/h2>\n

      Maybe not. \u201cIt\u2019s a challenging time for many first-time homebuyers looking to build equity,\u201d says Rob Barber, CEO of ATTOM. \u201cHome prices are at record highs, and for the typical American, buying and maintaining a home consumes about a third of their annual income.\u201d Many homebuyers, especially first-timers, can only afford a small down payment: The median amount is currently 15 percent of the sale price. That means they own only that percent of the home outright, which translates to it taking more time to achieve the equity-rich level of 50 percent.<\/p>\n

      Also, while the past few years have delivered big equity gains, the housing market is coming back down to Earth. Home prices are still increasing, but the pace has slowed considerably. So, no tide of rising property values to lift all home equity boats \u2014 at least, not as rapidly as in the last few years.<\/p>\n

      Barber points out that owning a home hasn\u2019t been this demanding on one\u2019s finances since 2007 \u2013 just before the Great Recession, during which real estate values and home equity plummeted. \u201cWhile today\u2019s housing market is quite different from that era, it serves as a reminder that markets don\u2019t go steadily up forever,\u201d Barber says. \u201cThere are likely to be drops and corrections in the future that lower the value of homes \u2014 but also make it possible for new owners to buy one.\u201d<\/p>\n

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      Key Takeaways Home values have consistently hit record highs in recent years, which has created a surge in more equity-rich homeowners. To be considered \u201cequity rich\u201d, a property\u2019s outstanding mortgage balance should be less than half of its market value. Being equity rich makes it easier to get financing, like HELOCs and home equity loans<\/p>\n","protected":false},"author":2,"featured_media":2663,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-2662","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-latest-news"],"featured_image_urls":{"full":["https:\/\/ft365.org\/wp-content\/uploads\/2025\/09\/2662-Home-for-sale-82680959.jpg",1280,720,false],"thumbnail":["https:\/\/ft365.org\/wp-content\/uploads\/2025\/09\/2662-Home-for-sale-82680959-150x150.jpg",150,150,true],"medium":["https:\/\/ft365.org\/wp-content\/uploads\/2025\/09\/2662-Home-for-sale-82680959-300x169.jpg",300,169,true],"medium_large":["https:\/\/ft365.org\/wp-content\/uploads\/2025\/09\/2662-Home-for-sale-82680959-768x432.jpg",640,360,true],"large":["https:\/\/ft365.org\/wp-content\/uploads\/2025\/09\/2662-Home-for-sale-82680959-1024x576.jpg",640,360,true],"1536x1536":["https:\/\/ft365.org\/wp-content\/uploads\/2025\/09\/2662-Home-for-sale-82680959.jpg",1280,720,false],"2048x2048":["https:\/\/ft365.org\/wp-content\/uploads\/2025\/09\/2662-Home-for-sale-82680959.jpg",1280,720,false],"morenews-featured":["https:\/\/ft365.org\/wp-content\/uploads\/2025\/09\/2662-Home-for-sale-82680959-1024x576.jpg",1024,576,true],"morenews-large":["https:\/\/ft365.org\/wp-content\/uploads\/2025\/09\/2662-Home-for-sale-82680959-825x575.jpg",825,575,true],"morenews-medium":["https:\/\/ft365.org\/wp-content\/uploads\/2025\/09\/2662-Home-for-sale-82680959-590x410.jpg",590,410,true],"crawlomatic_preview_image":["https:\/\/ft365.org\/wp-content\/uploads\/2025\/09\/2662-Home-for-sale-82680959-260x146.jpg",260,146,true]},"author_info":{"display_name":"henry","author_link":"https:\/\/ft365.org\/index.php\/author\/henry\/"},"category_info":"Latest News<\/a>","tag_info":"Latest News","comment_count":"0","_links":{"self":[{"href":"https:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/posts\/2662","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/comments?post=2662"}],"version-history":[{"count":0,"href":"https:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/posts\/2662\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/media\/2663"}],"wp:attachment":[{"href":"https:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/media?parent=2662"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/categories?post=2662"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ft365.org\/index.php\/wp-json\/wp\/v2\/tags?post=2662"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}