Federal Reserve’s “Flow of Funds” Report Posts Largest Increase on Record in Q4 2021

According to the latest edition of the Federal Reserve’s Z.1 Financial Accounts of the United States (i.e., the “Flow of Funds), in Q4 2021, the aggregate market value of all owner-occupied real estate in the United States experienced the largest quarterly increase on record.

From Q3 2021, owner-occupied real estate value of $3.68 trillion, the value soared $1.3 trillion higher in Q4 2021 to a value of $38.1 trillion. Households’ real estate’s year-over-year gain in the fourth quarter was 15.5%, the largest post-Great Recession increase of its kind. The rise in market value owes to the record-breaking pace of home price appreciation throughout the nation.

On the other side of the household ledger is liabilities. Home mortgages increased by $245 billion in Q4 2021 to $11.7 trillion. In terms of the scale of increases, real estate assets are increasing much faster than real estate liabilities. The change in the value of total home mortgages owes to a combination of new loans taken out for home purchases and the aggregate unpaid principal balance of all existing mortgages. In Q4 2021, the United States added 222,000 loans to the number of loans being serviced for a total of 39.6 million loans. The loans added and the loans serviced are on a seasonally adjusted basis.

Aggregate owners’ equity, the difference between the market value of all owner-occupied real estate and the aggregate value of home mortgages, increased in Q4 2021 to $26.3 trillion, or 69% of all household real estate—the highest share since 1987. Many homeowners have used the equity to finance remodeling projects, often by taking home equity lines of credit (HELOCs) or home equity loans. This trend applies today as much as it did in the past.