Homeownership Equity - a term that refers to the value of a given property after the mortgage debt is subtracted out, or more easily stated, the value of how much of a property you actually own. With each loan payment paid on time, the amount of equity in the property increases. When local property values rise, home equity also increases. Similarily, when properties decrease in value, home equity value also decreases.
The Federal Reserve stated homeownership equity reached a peak of 13.1 trillion in 2005 when prices for homes for sale were up and buying a condo or single family house was considered a good investment strategy for increasing one's net worth.
However, in 2011, as the US experienced a financial meltdown, home prices plummeted. During that year, the value of homeownership equity dropped to a staggering $6.4 trillion which essentially cut in half the value of the nation's housing market. Millions of homeowners found themselves in a negative situation with many homeowners now underwater, owing much more on their mortgage than the property could actually sell for.
In the years following the market crash leading up to today, the real estate housing market has recovered much of its pre-market crash value. RealtyTrac, a real estate information company and on line market place for foreclosure and distressed properties in the United States recently reported that homeownership equity has risen $4.9 trillion since 2011, raising the total equity value to $11.3 trillion.
In just the past three years, homeowners have experienced a sensational turnaround, and recovered a large amount of value previously lost on their home. Current homeowners welcome this fantastic news and prospective home buyers considering a purchase are a bit more confident that their new home will also be a solid investment.