Rising home equity during the Covid-19 pandemic has pushed up the median net worth of U.S. households by $40,000 from 2019 to 2022, according to a new data release from the Census Bureau. Driven by a sharp increase in house prices, median home equity climbed by $47,900.
Median household net worth rose from $136,500 to $176,500 during the period, in inflation-adjusted dollars.
“In 2022, about 62.2% of households reported home equity with a median value of $198,000 and about 35.7% of households held home debt with a median value of $160,000,” the report noted. The paper defined equity as “the value of an asset, minus any secured debts held against it.” Home equity is calculated by subtracting any amount still owed on a mortgage from the value of a home.
It found that home equity increased for most income and demographic groups. In total, 62.2% of households in 2022 reported having home equity, compared to 61.3% in 2019. The largest equity gains were among Asian householders, who were heavily concentrated in the West and Northeast – regions which the report said experienced higher home prices and larger home price increases. Median home equity for this group shot up from $265,643 to $390,000.
For White householders, median equity climbed from $160,194 to $200,000; for Hispanic from $122,427 to $174,000; and for Black householders from $94,707 to $145,000.
By race and ethnicity, home equity was held by 70% of White, 59.3% of Asian, 47.8% of Hispanic, and 40.5% of Black households.
The study also found that home equity increases with age. Younger householders and those with children were less likely to own a home, and those who did had greater home debt.
A related new report on the wealth of households in 2022 found that median household wealth (the 50th percentile) in 2022 was $176,500. However, one in 10 households (the 10th percentile) had zero dollars or less in wealth, while in the 90th percentile, one in 10 households had wealth exceeding $1.6 million. “The median wealth of households in the lowest income group (lowest quintile) was 7.3 percent of the median wealth of households in the middle-income group (third quintile).”
The report defined wealth as the value of assets owned minus the debts owed, and it can be negative. “Households with negative wealth are more likely than other households to experience higher rates of financial insecurity and are more vulnerable to economic shocks,” the report noted.
It also found that homeowners were wealthier than renters, with a median wealth about 44 times larger than those that rented. The median wealth of owners including home equity was $406,000 and $156,700 for owners with home equity excluded.
However, home equity alone did not account for the difference in median wealth between households that owned and those that rented. Other factors also played a role, like the age of the householder, their highest level of educational attainment, their annual household income, and marital status by age. Unsecured debt like credit cards, medical debts and student loans also factored in, as did the range of other assets or investments they held.
Home equity, however, had the highest median value. For example, 95.8% of households owned assets at financial institutions with a median value of $10,600. In comparison, 62.2% of households owned equity in their own home, and the median value was $198,500. Rental property had a median value of $200,000, but it was owned by only 6.7% of households.
“Estimates presented in this brief illustrate the wide variation in household wealth and, therefore, the economic well-being of households,” the report concluded.