Homeowners Gained $115 Billion in Equity in Q1 2025 – The Mortgage Reports

Home Equity Growth in 2025: A Key Factor for Sustainable Financial Development

Home equity represents a significant financial advantage of homeownership over renting, serving as a critical asset for wealth building. It aligns with Sustainable Development Goal (SDG) 1: No Poverty, by enabling financial resilience and economic stability for homeowners.

Importance of Home Equity in Sustainable Development

• Home equity provides funds for renovations, remodeling, investments, emergency funds, and debt repayment, supporting SDG 8: Decent Work and Economic Growth.
• It promotes responsible consumption and investment (SDG 12) by enabling homeowners to improve and maintain their properties.

Latest Trends in Home Equity Gains

Home equity growth correlates with housing price fluctuations, impacting economic sustainability across regions.

1. In the first quarter of 2025, U.S. homeowners with mortgages collectively increased their equity by $115 billion, a 0.7% annual rise, according to Cotality.
2. The average borrower now holds $302,000 in equity, though some regions experienced declines due to market disparities.

Economic disparities reflect challenges in the Southern states, particularly Texas and Florida, where weakening markets and natural disasters threaten home equity, highlighting the need for resilient infrastructure (SDG 11: Sustainable Cities and Communities).

Geographical Variations in Home Equity

• Top states with highest equity gains: Rhode Island ($37,000), New Jersey ($36,000), Connecticut ($35,000), Massachusetts ($23,000), and Maine ($20,000).
• States with significant equity declines include Hawaii (-$66,000), Florida (-$26,000), Texas (-$23,000), Arizona, Colorado, Utah (-$14,000 each), and Washington, D.C. (-$30,000).

These variations underscore the importance of regional economic policies that support sustainable housing markets and reduce inequalities (SDG 10: Reduced Inequalities).

Utilizing Home Equity: Pathways to Economic Empowerment

Converting home equity into liquid assets can be achieved through:

1. Home Equity Loans (HEL)
2. Home Equity Lines of Credit (HELOC)
3. Cash-Out Refinances

These financial instruments empower homeowners to invest in property improvements, consolidate debt, or fund new investments, advancing SDG 8 by fostering economic growth and financial inclusion.

Benefits and Considerations

• Home Equity Loans offer lower closing costs but may have higher interest rates.
• HELOCs provide flexible borrowing similar to credit cards, with variable rates and low closing costs.
• Cash-Out Refinances replace existing mortgages with larger loans, returning cash to homeowners.

Responsible use of home equity supports sustainable economic development and personal financial health.

Calculating and Accessing Home Equity

Home equity is calculated by subtracting the mortgage balance from the current property value, an essential step for financial planning aligned with SDG 1 and SDG 8.

Equity Calculation Example

• Home value: $500,000
• Mortgage balance: $300,000
• Equity: $200,000

Lenders typically allow access to up to 80% of the home’s value, maintaining a 20% buffer for financial security, promoting sustainable financial practices.

Next Steps for Homeowners

Homeowners are encouraged to evaluate their equity and consult lenders to determine borrowing options that best suit their needs, supporting SDG 8 and SDG 10 by promoting equitable access to financial resources.

• Assess property value through online tools or professional appraisals.
• Consider financial goals and sustainability when leveraging home equity.
• Engage with lenders to explore loan products and eligibility.

Leveraging home equity responsibly contributes to sustainable economic growth and enhances financial resilience, aligning with the broader objectives of the Sustainable Development Goals.

1. Which SDGs are addressed or connected to the issues highlighted in the article?

1. SDG 1: No Poverty – The article discusses home equity as a form of wealth building and financial security, which relates to reducing poverty by increasing household assets.
2. SDG 8: Decent Work and Economic Growth – Home equity can be used for investments, renovations, and debt consolidation, supporting economic growth and financial stability.
3. SDG 11: Sustainable Cities and Communities – The article touches on housing markets, property values, and regional disparities, which relate to sustainable urban development and affordable housing.

2. What specific targets under those SDGs can be identified based on the article’s content?

1. SDG 1 – Target 1.4: Ensure that all men and women have equal rights to economic resources, including ownership and control over property.
2. SDG 8 – Target 8.10: Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance, and financial services for all.
3. SDG 11 – Target 11.1: Ensure access for all to adequate, safe, and affordable housing and basic services.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

1. Indicator for SDG 1.4: Proportion of population living in households with ownership of housing or land, measured by home equity values.
2. Indicator for SDG 8.10: Number and volume of home equity loans, home equity lines of credit (HELOC), and cash-out refinances as measures of access to financial services.
3. Indicator for SDG 11.1: Changes in home equity values by state and region as a proxy for housing affordability and stability.

4. Table of SDGs, Targets and Indicators

Source: themortgagereports.com