May 8, 2024 - Economy

Homeowners are getting rich. Renters? Not so much

The line chart shows the fluctuation in total equity on mortgaged homes in the U.S. from January 2000 to March 2024, with a significant dip in 2012 to an all-time high of $16.9 trillion.
Data: ICE; Chart: Axios Visuals

After several years of soaring house prices, U.S. homeowners are sitting on a record mountain of wealth.

Why it matters: The economy looks pretty great for Americans who own their own homes — that's nearly 66% of the population!

Driving the news: Homeowners with mortgages hold just under $17 trillion in equity, a record high, per a report out this week from Intercontinental Exchange (ICE).

Zoom in: A record $11 trillion of home equity is "tappable," meaning homeowners can borrow against it while still maintaining at least 20% equity in the house, per the report, which looks at data from March.

  • About 48 million folks have access to tappable equity, with an average of $206,000 per mortgage holder.

The big picture: The American dream of homeownership, where you snag a 30-year mortgage and step onto the wealth-building ladder, is kind of dead at the moment — unless you've already bought a home.

  • Wealth overall has soared in the U.S. since the pandemic, in part because of increasing home and stock prices.

Zoom out: Rising asset prices — both stocks and housing — make consumers feel pretty good. That wealth effect is likely helping to keep consumer spending numbers healthy.

Meanwhile, because of rising mortgage rates and still-increasing home prices, buying a house is increasingly out of reach for first-time buyers.

  • It now requires 36% of the median household income to purchase a median-priced home, the ICE report notes. (30% is considered affordable.)
  • There's still a shortage of homes to buy, and that's keeping prices elevated. There were 20% fewer home listings in March compared to what was typical in 2017-2019.
  • Nearly three-quarters of renters said they believe it would be somewhat or very difficult to obtain a mortgage — up from about half in 2021, as Axios Macro reported earlier this week.

What they're saying: "[T]he continued strength of the economy has made it harder to afford a home and widened the real-estate wealth gap between rich and poor Americans," Redfin senior economist Elijah de la Campa said in a recent housing report.

The bottom line: Homeowners are getting richer and renters are getting left behind.

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