Which states have the richest homeowners?

Home ownership has never been more valuable in the U.S., with Americans’ combined home equity hitting record highs in the first quarter of 2024, reaching nearly $33 trillion.

According to the latest data from real estate fintech platform CoreLogic, the average mortgaged homeowner has about $305,000 in equity, a gain of about $28,000 over the past year. While $28,000 is nothing to sneeze at, homeowners in about a third of U.S. states have surpassed that average, with some by more than double.

Which states and cities have the wealthiest homeowners? What’s driving their wealth? And which homeowners aren’t benefiting from the equity boom? Let’s dig into the details.

Which states have the largest equity gains?

Since the first quarter of 2023, U.S. mortgage-holding homeowners have collectively experienced a $1.5 trillion increase in their equity holdings, largely concentrated in the West and Northeast. Selma Hepp, chief economist at CoreLogic, attributes the increase in homeowner wealth to continued increases in residential real estate prices. The growth, which was fueled by the pandemic, has remained strong, driven in part by a lack of new construction and persistent housing shortages. Currently, the median value of single-family homes nationwide is above $400,000.

Based on CoreLogic data, here are the five states with the highest annual stock market gains:

1. California: $64,000
2. Massachusetts: $61,000
3. New Jersey: $59,000
4. Hawaii: $58,000
5. (tie) New Hampshire and Rhode Island: $49,000

Overall, stock gains ranged from $64,000 in California to $600 in Texas.

In which metropolitan areas is self-esteem highest?

Where specifically are the highest-value homes? Go west, young homeowner: With one exception, the western half of the U.S. has seen the most significant year-over-year increases in home values.

According to CoreLogic, the largest metropolitan areas for capital gains, in dollar terms, are:

1. Glenwood Springs, Colorado: +$282,875
2. Jackson, Wyoming: +$187,794
3. Vineyard Haven, Massachusetts: +$175,419
4. San Jose-Sunnyvale-Santa Clara, California: +$168,489
5. Edwards, Colorado: +$140,626

On average, homeowners in these markets have built up more than $1 million in equity.

A similar real estate analysis from ATTOM Data Solutions found that the pricier markets of the Northeast and West had the highest numbers of equity-rich homeowners in the first quarter of 2024, led by San Jose, California, Miami, Florida, and Los Angeles, California.

“In the most expensive markets (median prices above $400,000 in the first quarter of 2024), 53 percent of mortgage payers were equity rich,” says Rob Barber, CEO of ATTOM. “That level dropped to 43 percent in mid-price markets and 37 percent in the lowest-priced areas.”

Where are homeowners in trouble?

However, not all homeowners are reaping the benefits of rising equity. In some states, the gains are modest (such as Mississippi, which saw only a $1,700 increase) or nearly flat (just $600 in Texas). And in some places, homeowners owe more on their mortgages than their homes are worth, a condition known as negative equity or “underwater.”

According to CoreLogic, the states with the highest percentage of negative equity are:

1. Louisiana 5.7%
2. Iowa 4.8%
3. Mississippi 3.9%
4. Oklahoma 3.9%
5. North Dakota 3.7%

“When you look at what those markets are, they tend to be lower income markets, lower down payments, historically lower home price appreciation,” Hepp said. “You also see more natural disasters in those areas.”

All told, the number of homes in negative equity nationwide in the first quarter of 2024 stands at just over 1 million homes, which is actually down from the previous quarter and the lowest negative equity figure in CoreLogic’s historical data. To put that in context, 12 million homes were underwater during the Great Recession. “Right now, we’re only at about 1 percent of homeowners nationwide with negative equity,” Hepp says.

Even if the economy slows significantly, the impact of a recession on the housing market can vary greatly, thanks to the sheer size of the equity stakes. “This time around, existing homeowners are in a much better position with that financial cushion than they were coming out of the financial crisis,” Hepp adds.

Where Home Ownership Hurts Most

While homeowners enjoy high levels of equity, they also face higher costs associated with the home. Bankrate’s Hidden Cost of Homeownership study found that the average annual cost of owning and maintaining a single-family home has risen 26 percent over the past four years, to $18,118 per year. Everything from property taxes to homeowners insurance to goods and services has become more expensive, driven by inflation in general and rising values ​​in particular (in some cases).

Not surprisingly, the places with the biggest gains often feel the most pain: “Homeowners (who) enjoy the best equity (are) in the most expensive markets in the country, with the highest cost of ownership,” Barber says. Several of CoreLogic’s top states for capital gains — Hawaii, California, Massachusetts and New Jersey — pay more than $25,000 annually in ownership and maintenance costs. They, along with other big winners New Hampshire and Rhode Island, also saw the biggest increases, the Bankrate study found.

Why is equity important?

Equity in a home is important because it represents wealth: ownership of a significant financial asset. Often, a home is the largest portion of a person’s net worth.

“For those who do have equity, it’s a very strong financial cushion,” Hepp says. “What homeowners can do is tap into that equity through HELOCs or home equity loans to spend on home improvements, to pay for their kids’ college, or to help them with down payments” to buy their own home. Or homeowners can hold on to their equity — and pass it on to future generations.

Hepp predicts that home prices and equity will continue to rise, and Barber agrees.

“Many homeowners are stuck with low-interest mortgages that they took out before rates skyrocketed in 2021,” he said. “That creates a scenario of rising home prices on top of an unusually large number of homeowners who have been building equity for years, if not much longer. Higher home prices combined with declining loan balances are likely to produce more capital gains.”

While rising home prices—and therefore equity—is good news for current homeowners, it could make it harder for new buyers to enter the market. But it could be worth it: Building significant equity can take decades. The sooner you own, the faster you can build—and profit from real estate booms like today.