It's no secret that Americans keep a great deal of money secured in their homes, but a look at the actual numbers is still revealing.
According to 1991 U.S. Census Bureau figures, Americans have more than $4.1 trillion in equity in the homes they own. That's an average of $66,152 per household and accounts for nearly half of the net worth of the average American Family.
That makes home equity the primary source of a household's net worth, with financial assets (including savings accounts, stocks, bonds, etc.) coming in second.
Owning a home is perhaps the single most important investment that can be made. By paying down mortgage debt, home equity -- and therefore, household net wealth -- grows. That equity can be tapped through a home equity loan to give home owners cash for significant costs such as college tuition.
Home ownership and home equity are even more important for lower-income households than for households in general. In 1991, home equity for owners with monthly income below $1,071 accounted for 75 percent of their total net worth. People over 65 make up the majority of this group, meaning home equity is an extremely important financial cushion for postretirement years.
For younger home owners, home equity also makes up a significant portion of their wealth. For example, for households headed by a person age 35 or under, home equity accounted for 54 percent of total net worth in 1991.
For households with limited net worth, home equity takes on great significance as well. For home owners with net worth from $5,000 to $10,000, 71 percent of that net worth is home equity. As net worth rises, home equity as a percentage declines since those households typically have greater financial assets of other types.
For home owners of all ages and income levels, it's clear that buying a home and building equity in the home offers a stepping stone to secure financial future.
May not be used without written permission from The Home Builders Association of Northwest Florida.