At the end of 2024, Flow of Funds data from the Federal Reserve showed that the total value of owner-occupied real estate registered $48.1 trillion, the third highest value on record behind the second and third quarter of 2024. Home equity followed a similar trend, also notching the third highest level at $34.7 trillion. Mortgage debt continued to grow, hitting a record-high of $13.3 trillion.
Here’s what we learned
The value of homes remains high
In 2024Q4, the total value of owner-occupied real estate, the value of all homes owned by those living in them, dropped $0.4 trillion from the previous quarter’s high, settling at $48.1 trillion. This reflects a pull back from the highest total recorded earlier in 2024. Despite the drop, homes gained $3.2 trillion in value over the last year. Further, the total value of real estate has more than doubled since mid-2016.
New mortgage debt continued to grow
During the fourth quarter of 2024, mortgage debt reached a new high total of $13.3 trillion, reflecting an increase of $100.5 billion from the previous quarter and $340.2 billion (2.6%) from the same period the previous year. The annual growth in mortgage debt matches what was typical in 2017 to 2019 despite being less than half of what was typical from mid-2020 to mid-2023.
Home equity remained near all-time high
With rising mortgage debt and a pull back in real estate value, home equity experienced a half a trillion dollar drop in the fourth quarter. However, equity rose nearly $3.2 trillion over the last year. The total equity held by homeowners in real estate at the end of 2024 in real estate was $34.7 trillion.
Equity, when measured as a proportion of real estate value, is at 72.2%, matching what was seen in the first quarter of 2024, but falling behind the middle two quarters of the year. The last time home equity was this high as a share of real estate value was before 1960.
It’s worth noting that the trend observed here is for the aggregate or total value of equity versus real estate value. For any individual household, there will be more or less than this amount.
Home equity reshapes today’s housing context
While not a record, today’s high home equity is an important cushion for homeowners and the economy. Even if homes were to lose 10 percent of their value overnight, homeowner equity would still be at 69.5%, similar to the second half of 2021. Using this same framework, a 20 percent drop in home prices would leave homeowner equity at 65.6% of real estate value, on par with what we saw in 2019.
Find the full Flow of Funds data.
