What Being Equity Rich Means For Homeowners

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Owning a home has long been considered one of the best pathways to building wealth. Homeowners’ median net worth is around $396,500 – significantly higher than the $10,410 median net worth of renters, Federal Reserve data shows. The single biggest asset most people have is their home.

However, not all homeowners are equally wealthy. Some aren’t just rich, but equity rich: They own more of their house than they owe on it (with their mortgage). Nearly half of mortgaged residential properties in the U.S. now fall in the equity-rich category – close to double what they were just five years ago, according to a new report by real estate data analyst ATTOM.

What’s behind the rise of the equity rich – and what does it mean for homeowners who’ve joined their ranks?

What does equity rich mean?

“Equity rich” is an industry term used by real estate analysts and mortgage professionals. To consider yourself equity rich, you need to have an equity stake of 50 percent or more in your home—meaning your outstanding mortgage balance is less than half the home’s fair market value.

For example, let’s say your home appraises for $500,000. If you owe $250,000 or less on your mortgage, you’re equity rich. Determining equity rich status is not about how much you paid when you purchased your home. Instead, it relies on knowing how much your home is currently worth.

According to the latest figures from ATTOM, 47.4 percent of all mortgaged residential properties in the U.S. fell under the “equity rich” label at the close of the second quarter of 2025. That’s quite a difference compared with five years ago: In Q2 2020, just 27.5 percent of properties had reached equity-rich status.

What’s behind the rise in equity-rich homes?

There are two basic ways to accumulate home equity: Your property’s mortgage debt decreases, and/or your property value increases. The recent surge in equity-rich properties isn’t due to loads of thrifty homeowners prepaying their mortgage principal (though many doubtless are). Instead, it’s the housing market that is creating more equity-rich homeowners.

The trend can be traced to the pandemic’s impact on residential real estate. Home prices and values rose at a fast clip between 2020 and 2022, much faster than mortgage debt – and they’ve kept on rising even as the pandemic ebbed. The median price of a home in the U.S. increased from $317,100 in the second quarter of 2020 to $410,800 at the end of Q2 2024, according to data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.

As a result, home equity stakes have risen to unprecedented amounts. Total home equity in mortgaged properties is $17.8T, according to data analyst ICE Mortgage Technology. Their owners can access an average of $213,000.

What is the significance of being equity rich?

The biggest upside of being equity rich is fairly straightforward: a stronger financial profile and higher net worth. You have an asset that’s worth more (and that’s more valuable to bequeath to heirs). And you’re likely to profit more: If you sold your home tomorrow, you’d have less mortgage debt to settle, letting you keep more of the sale proceeds.

Speaking of mortgages, you’re in a better position to take out a second one – to tap your property’s value via a home equity loan or a home equity line of credit (HELOC) – when you have a sizable ownership stake. More equity means more borrowing power. That not only means a bigger loan or credit line, but better terms as well.

Are there any drawbacks to being equity rich?

There’s clearly plenty to celebrate if you’re equity rich. But there are some additional considerations to keep in mind:

• If your home is worth more, owning it will likely cost more, too. As home values have risen, so have homeownership costs – everything from property taxes to homeowners insurance premiums to maintenance expenses. Not surprisingly, states with the highest home prices tend to have the highest home costs, too, as Bankrate’s Hidden Costs of Homeownership Study found.
• All that equity isn’t going to be yours to keep. Being equity rich can be a bit deceiving, notes Sebastian Frey, a broker with Compass in the Bay Area of California. For example, consider someone who has amassed a $1 million equity stake in their home. It’s only a paper amount until you actually sell the property and, even then, “that does not equal $1,000,000 in cash,” Frey says. “A typical homeowner with $1,000,000 in gain, even if sold as a married couple, would result in a cost of sale of close to $200,000 considering expenses for home preparation, marketing, sales commissions, and capital gains tax.”
• Values change all the time – which means your equity does, too. Being equity-rich doesn’t necessarily mean staying equity-rich – especially if a serious deflation of your local real estate market occurs. For example, ATTOM’s latest figures show that the percentage of equity-rich homes in Florida decreased by more than seven percentage points over the past year. Arizona, Georgia, Colorado and Washington all posted declines in the number of equity-rich homes, too. With that in mind, if you are carrying a big home equity loan and a large mortgage, you could wind up owing more than the property is worth should a recession occur.

Will more homeowners become equity-rich soon?

Maybe not. “It’s a challenging time for many first-time homebuyers looking to build equity,” says Rob Barber, CEO of ATTOM. “Home prices are at record highs, and for the typical American, buying and maintaining a home consumes about a third of their annual income.” Many homebuyers, especially first-timers, can only afford a small down payment: The median amount is currently 15 percent of the sale price. That means they own only that percent of the home outright, which translates to it taking more time to achieve the equity-rich level of 50 percent.

Also, while the past few years have delivered big equity gains, the housing market is coming back down to Earth. Home prices are still increasing, but the pace has slowed considerably. So, no tide of rising property values to lift all home equity boats — at least, not as rapidly as in the last few years.

Barber points out that owning a home hasn’t been this demanding on one’s finances since 2007 – just before the Great Recession, during which real estate values and home equity plummeted. “While today’s housing market is quite different from that era, it serves as a reminder that markets don’t go steadily up forever,” Barber says. “There are likely to be drops and corrections in the future that lower the value of homes — but also make it possible for new owners to buy one.”