#homeowner-equity

#homeowner-equity

ATTOM's report said Q4 2025 marked the lowest share of equity-rich properties since late 2021 while emphasizing that overall equity levels continue to compare favorably with historical benchmarks. In early 2020, only about one-quarter of mortgaged homes were considered equity rich. After years of rapid gains, homeowner equity is settling into a more sustainable range, and that's not a negative sign for the market, said Rob Barber, CEO at ATTOM.

Remember that a home loan's financial leverage can boost ownership profits over the mortgage's life but also magnify the impact of price declines. My trusty spreadsheet reviewed Cotality's third-quarter report on homeowner equity, focusing on homes with mortgages and comparing home values with loan balances. Cotality tracked this measure of financial cushion for borrowers in 49 states (Vermont didn't have enough data) and the District of Columbia.

Homeowners who have a higher mortgage rate are less likely to hoard the property. Higher rates mean investments are less profitable. It means holding costs are higher and therefore the house is more likely to be re-sold. It also implies that homeowners who lose their jobs are more likely to need to sell or face delinquency and even foreclosure. Foreclosures have been ultra-low for many years.

The capital gains exclusion was designed in 1997 to help homeowners avoid taxes when selling their primary residence. At the time, the $250,000 (individual) and $500,000 (joint) limits covered most home sales. But those limits have never been adjusted for inflation.