U.S. Real Estate Values Soar Higher in Q1 2021

According to the latest results from the Federal Reserve’s Z.1 Financial Accounts of the United States, also known as the ‘Flow of Funds”, with analysis provided by the National Association of Home Builders (NAHB) in Q1 of 2021, the aggregate market value of all owner-occupied real estate in the US registered the largest numerical quarterly increase in the last 20 years’ worth of data. From $32.84 trillion in Q4 of 2020, real estate rose by $0.94 trillion to $33.78 trillion. The market has been bolstered immensely by nationwide home price appreciation, which only overheats it even more. On the liabilities side of real estate’s balance sheet, home mortgages rose by $120 billion in the last quarter to $11.04 trillion. In terms of the scale of increases, the real estate assets are increasing much faster than real estate liabilities. The change in the value total home mortgages owe to the combination of more mortgages being undertaken by prospective homeowners and the aggregate unpaid principal balance of all mortgages being paid down. Meanwhile, aggregate owners’ equity — the difference between the market value of all owner-occupied real estate and the aggregate value of home mortgages — increased in the latest quarter to $22.7 trillion, or 67% of all household real estate, the highest share since 1989. This high share speaks more broadly for all homeowners as a good time to refinance their existing loans, which the Mortgage Bankers Association’s recent weekly survey data reflect.