Home sweet home

Despite a sharp rise in interest rates, home owner equity values reached a record high of USD 32.6 trillion at the end of Q3 2023. Over the past few years mortgage debt has increased but house prices have clearly outpaced it. Homeowners’ balance sheets look resilient because the total number of mortgaged residential properties with negative equity value decreased by 7.7%. According to CoreLogic, this represents about 1.8% of all mortgaged properties compared to 26% at the peak of the housing crisis in 2009. However, it is unclear whether high homeowner equity translates into consumer spending, obviously the equity is not liquid unless consumers borrow against it.

Source: US Federal Reserve, Financial Accounts of the United States, Q4 2023.