Home Equity Accounts for Most
      of Homeowners' Wealth

      
 

      
How important is home equity to the net worth of the average
      American family?

      
The $4.1 trillion in equity that Americans had in the homes
      they owned in 2000 amounted to an average of $66,152 per household,
      or nearly half of the net worth of the average homeowning American
      family, according to U. S. Census Bureau figures analyzed by
      the National Association of Home Builders (NAHB).

      
"This report underscores the value of homeownership to
      peoples' financial well-being," said NAHB president Jim
      Irvine, a home builder from Portland, OR. "Home ownership
      is a tremendous vehicle that provides people with a financial
      cushion and also acts as a steppingstone to greater wealth."

      
In 2000, net home equity represented 45 percent of total net
      worth for the 65 percent of the households that owned their homes.
      That made home equity the primary source of a household's net
      worth, topping financial assets, such as savings accounts, stocks
      & bonds, which together made up about 36 percent of a household's
      net worth.

      
"Owning a home is the single most important investment
      for the majority of American households," Irvine said. "By
      paying down mortgage debt, home equity -- therefore, household
      net wealth-- grows. That equity can be allowed to build or can
      be tapped through a home equity loan to give homeowners cash
      for significant costs such as college tuition."

      
Homeownership and home equity are even more important for
      lower-income households than for households in general. In 2000,
      home equity accounted for 75 percent of the total net worth for
      owners with monthly incomes below $1,071. People over 65 make
      up nearly 40 percent of this group, meaning home equity is an
      extremely important financial nest egg for the post-retirement
      years.

      
Home equity also constituted a significant portion of the
      wealth of younger home owners. For households headed by a person
      35 or younger, home equity accounted for 54 percent of the total
      net worth in 2000. Homeowners between the ages of 45 and 69 kept
      42 percent of their net worth in home equity in 1991.

      
For households with limited net worth, home equity takes on
      an even greater significance. For homeowners with net worth from
      $5,000. to $10,000., home equity made up 71 percent of that net
      worth; as net worth rises, home equity as a percentage declines
      because those households typically have greater financial assets
      of other types.

      
"For homeowners of all ages and income levels, it's clear
      that buying a home and building equity in the home is a solid
      step toward a future of financial security," Irvine said.