Home Equity as the Principal Asset
For most American families, the principal asset in net worth is home equity. The Federal Reserve’s Survey of Consumer Finances consistently shows that owner-occupied housing is the largest single component of household wealth for the majority of families.
Home equity equals the market value of a home minus any outstanding mortgage balance. As families pay down their mortgage and the home’s value rises, equity grows, often becoming the primary driver of overall net worth.
Other assets, such as retirement accounts, savings, and investments, are important but typically smaller for typical households than the value tied up in housing. For many families, financial security depends heavily on the value of their home.
Learn more about household wealth and asset composition from the Federal Reserve’s Survey of Consumer Finances at Federal Reserve Survey of Consumer Finances.
