US homeowners are sitting on $28.7 trillion of equity

• A new report from LendingTree found that US homeowners have $28.7 trillion in total home equity.
• That's more than $334,000 of equity per owner-occupied housing unit in the US.

Americans are sitting on a $28.7 trillion mountain of home equity.

That's according to a new report from LendingTree, which pointed out that even though the figure has dipped from a record $31.8 trillion in the second quarter of 2022, it remains significant. On balance, that comes out to roughly $334,000 of equity for every owner-occupied housing unit in the country.

The huge total value of home equity in the US is one consequence of rising home prices and values. Wells Fargo economists pointed out earlier in August that massive home-price appreciation could help keep consumers afloat as pandemic savings dry up. Soaring home prices look like an "underappreciated tailwind" for homeowners, the bank said.

"Homeowners have more equity in their homes today than they did at any point in the 35 years between 1987 and 2022," the economists wrote in a note. "Yes, higher rates make borrowing more expensive, but a home loan generally carries far lower interest than credit card debt, especially after accounting for the tax deductibility of interest on a mortgage."

In LendingTree's analysis of 580,000 home equity loan offers from January 1 to July 31, 2023, researchers found that the average home equity loan offering came in at $104,102 across all 50 states.

Massachusetts, New York, and Vermont had the largest average loans, with each state offering loans above $135,000. Meanwhile, borrowers in Mississippi, North Dakota, and Missouri received the smallest offers, at about $75,000.

Still, LendingTree senior economist Jacob Channel highlighted that there are some drawbacks to taking on a home equity loan.

"Not only can qualifying for a home equity loan be more challenging than qualifying for other types of debt, defaulting on a home equity loan can have serious negative consequences," Channel said. "Owing to this, borrowers shouldn't rush out to get a home equity loan until they fully understand all of the risks associated with them."

Overall, climbing home values have given real estate a boost through the pandemic, and it now accounts for about 25% of household assets, according to Wells Fargo data, and still-rising home equity opens the door for consumer spending to stay resilient.

"Increased home equity due to the rapid rise in home values and a jump in mortgage refinancing are two additional factors that may support household staying power in the years to come," the Wells Fargo economists said.