cbsnews.com
Home Equity Levels Rise Modestly Despite Market Slowdown
As of March 2025, the average U.S. homeowner has $313,000 in home equity, a 6% year-over-year increase, despite recent declines, influenced by low housing inventory, high home prices, and tempered demand due to higher mortgage rates; experts predict modest future increases.
- What factors are influencing the projected growth or stagnation of home equity in 2025?
- While the rapid home value increases of the pandemic have slowed, home values remain relatively stable. Experts predict modest home equity increases of around 5% in 2025, driven by factors like low housing inventory and continued demand. However, this increase is expected to be significantly less than previous years' growth.
- What are the current home equity levels and their immediate implications for homeowners?
- The average homeowner in March 2025 had $313,000 in home equity, a 6% year-over-year increase, though slightly down from recent months. This allows increased access to home equity loans or HELOCs for borrowing. Home equity reached nearly $35 trillion by the end of 2024, significantly up from $20 trillion in 2020.
- How might climate-related disasters and regional variations in housing markets affect future home equity levels and borrowing options?
- The future of home equity growth hinges on several interacting factors: location-specific market conditions, the persistence of high mortgage interest rates impacting demand, and potential effects of climate-related disasters on property values. The availability and affordability of home equity loans and HELOCs will directly reflect these trends.
Cognitive Concepts
Framing Bias
The article's framing is subtly positive, emphasizing the potential benefits of increased home equity and the availability of home equity loans and HELOCs. The headline and introduction focus on the possibility of increased borrowing power, which might encourage readers to consider borrowing against their home equity without fully weighing the potential risks. The inclusion of a call to action to compare borrowing options further reinforces this positive framing.
Language Bias
The language used is generally neutral, but phrases such as "baked-in benefits" and describing home equity increases as opening the door to "more borrowing power" subtly promote a positive view of home equity borrowing. The article also uses terms like "modest increases" which lack numerical precision and could be interpreted subjectively. More precise language should be used throughout.
Bias by Omission
The article focuses primarily on expert opinions regarding future home equity increases, but omits discussion of potential downsides or risks associated with home equity borrowing, such as the impact of rising interest rates on repayment ability or the possibility of foreclosure in case of financial hardship. It also lacks detailed regional data, focusing instead on national averages which may not reflect the diversity of the housing market. While acknowledging that not all homeowners will experience the same increase, it doesn't delve into the specifics of which demographics or geographic areas might be disproportionately affected.
False Dichotomy
The article presents a somewhat false dichotomy by framing the discussion around whether home equity will "increase" or "remain steady," oversimplifying the potential for regional variations and different outcomes for individual homeowners. It doesn't adequately address the possibility of home equity decreases in certain markets.
Sustainable Development Goals
Increased home equity can potentially reduce inequality by providing homeowners with access to capital for investments or debt consolidation, particularly in times of economic hardship or inflation. This is especially relevant if lower-income homeowners disproportionately benefit from equity growth.