Many Americans may not know it, but they're sitting on a gold mine just waiting to be tapped. The total equity held in real estate by homeowners is now nearly $36 trillion, according to the latest Federal Reserve data. That marks an increase of over $175 billion over the past year. When measured as a percentage of total real estate value, home equity has reached 72.6%.
But this massive pool of wealth isn't just a financial safety net, it's rapidly becoming a dynamic, data-informed asset class. As property valuation technology evolves and lending models diversify, the way we understand and use home equity is being transformed. For appraisers and industry professionals, this means precision, adaptability, and insight are more critical than ever.
The growing role of home equity in financial planning
For decades, using home equity has been increasingly viewed by homeowners as a valuable tool to accomplish many important financial objectives, from paying for
Yet, home equity wasn't always considered a dynamic financial resource, available to finance life goals, supplement households, and build generational wealth. Truth is, our attitudes about tapping this wealth shifted dramatically over the past century – a fascinating trend worth tracing for appraisers, lenders and homeowners alike.
The conservative era: When borrowing against the home was taboo
Borrowing against your home was regarded as risky if not downright irresponsible 75 to 100 years ago. That's when mortgage lending practices were much more conservative. But with the rollout of cash-out mortgage refinance loans in the 1950s, Americans started to think of built-up equity in their residences as a flexible and helpful resource instead of a sacrosanct reserve that should never be touched.
The rise of home equity loans and HELOCs and the hard lessons learned during the 2008 housing crash
The popularity of
For proof, ponder that home equity credit lines totaled up to $50 billion by the mid-1980s, representing approximately 3% of all outstanding mortgage credit; meanwhile, between 1987 and 1988, closed-end home equity loans increased 34%. Equity-tapping practices snowballed and became even more mainstream across the 1990s and early 2000s.
Then came the financial sea change better known as the 2008 housing market crash. Home prices and valuations tanked, and trillions in home equity dollars disappeared virtually overnight, resulting in serious negative equity positions for many borrowers who had heavily leveraged their properties – forcing the country to rethink its lending and borrowing practices. Waves of foreclosures, bankruptcies, and stricter credit rules inevitably followed. National home equity dropped about 60%, to around $5.3 trillion by the first quarter of 2009, down from $13.5 trillion in 2006.
A rebound fueled by pandemic-era wealth and new tools for a new generation
Thankfully, America's housing market rebounded in the years that followed. Household wealth increased dramatically during the pandemic housing boom, contributing to the home equity cash cow we now enjoy nationally (ponder that the share of homeowners who have completely paid off their mortgages has reached a record high of 40.3% in 2025). But borrowers in recent years have adopted a more cautious and creative approach to equity, with many choosing to leave it untouched. A recent Bankrate survey found that 23% of baby boomers versus 19% of Gen Xers believe there's no good reason for homeowners to access built-up home equity for cash.
When borrowers are ready to extract equity, there are more options to choose from today.
What the shift means for appraisers and the future of home equity
Property valuation professionals can take notice of this evolution and appreciate the accelerating significance of precision and adaptability in property valuation. Accurate valuations and precise home price indexes are more important than ever in a climate where home equity options abound and consumer expectations can swing rapidly. Lenders today should carefully consider more than just market value; they also need to understand how lending innovations, local economic conditions, and demographic trends will continue to impact the accessibility and liquidity of home equity.
To maximize home equity's full potential, homeowners and lenders alike require accurate valuation data, modern property analytics, and advanced risk modeling. Innovation in these spaces is altering what was previously a static form of wealth into a dynamic, data-informed asset class. For valuation providers, this means their expertise is more invaluable than ever before. By leveraging smarter insights and technology, the industry can redefine home equity and position homeowners, lenders, and the housing market overall to benefit from more precise and reliable numbers.
