Driven by rising home prices, homeowner equity in the U.S. increased a whopping 35% – or nearly $10 trillion – in 2021, according to Black Knight’s Mortgage Monitor Report.
The report defines tappable equity as the amount available for mortgage holders to access while retaining at least 20% equity in their homes.
Homeowner equity increased so much during the past year that the total market combined loan-to-value ratio fell below 45% for the first time on record – down from 50% at the same time last year
“Home price appreciation over the course of 2021 was unlike anything that’s come before, and the incredible growth we’ve seen in homeowner equity is testament to that fact,” says Ben Graboske, president of the data and analytics division at Black Knight, in the report. “The aggregate total of $9.9 trillion represents an astounding 35 percent annual growth rate – which works out to an increase of $2.6 trillion in tappable equity in a single year. That’s $185,000 available to the average mortgage holder before hitting a maximum combined loan-to-value ratio of 80 percent.”
The $2.6 trillion gain was the largest annual increase on record – more than double 2020’s prior high of $1.1 trillion – giving the average homeowner a $48,000 bump.
What’s more, home prices are likely to continue to increase during the first quarter of 2022, due to low inventory levels.
“Both the Black Knight HPI and our Collateral Analytics daily tracking data showed home price growth reaccelerating as the year came to a close,” Graboske says. “In fact, at a time of the year that typically sees little to no price movement – home prices increased by 0.84 percent last month, marking the largest December price growth on record.”
“That same daily data suggests the trend continued in January – even as interest rates began to spike,” Graboske adds.
