Americans are de-leveraging, as both home equity and income are growing faster than debt levels, new studies show.
Americans have taken on more debt recently. The Federal Reserve reported that total household debt increased by $185 billion to $18.39 trillion in the second quarter of 2025. On average, however, Americans’ mortgage debt relative to home values has been falling, Bankrate reports.
Only the District of Columbia and Louisiana showed a decline in home equity levels, falling by 38 percent and 22 percent, respectively, over the past five years, according to the study. Alaska showed the smallest level of home equity appreciation at 17 percent, followed by North Dakota (19 percent) and Colorado (48 percent).
“The total value of mortgaged homes nationwide has risen fast, by over $10 trillion in the last five years—much faster than mortgage debt,” the report reads.
Americans’ mortgage debt relative to home values fell significantly over the past five years, increasing the wealth of those who own their homes.
“On a national level, the average [home] loan-to-value ratio in 2020 was 82 percent; it’s now 70 percent,” Bankrate financial analyst Stephen Kates told The Epoch Times.
“Overall, it’s very, very positive.”
The reasons for this vary state-by-state, Kates said. In some states, such as West Virginia, the increase in home equity is primarily due to a substantial rise in home values.
West Virginia has seen a large influx of new residents in recent years, as a percentage of its population, and the state features some of the lowest home prices nationwide, averaging $171,861, the Bankrate report states.
Home prices in Oklahoma are also relatively affordable at an average of $217,142.
In other states, such as Connecticut, which has some of the highest average home prices, at $426,752, the increase in home equity was largely driven by homeowners’ deleveraging, either paying down mortgages or borrowing less to buy, according to Kates.
The District of Columbia, by contrast, featured high home prices, on average $617,355, with little price appreciation. Home values in D.C. increased by less than 3 percent over the past five years, compared with a 45 percent average increase across the United States, while D.C. residents took on more mortgage debt.
About 40 percent of Washington-area real estate agents said their clients’ decision to buy or sell was because of federal workforce layoffs, and 38 percent said layoffs are causing home prices to come down in the D.C. market, Sturtevant wrote.
Although migration drove some of the price increases for housing, it didn’t always correlate with home equity valuation.
Likewise, Connecticut, which ranked third for home equity appreciation, had 117,000 more people move out than in during that period.
To calculate average home equity amounts, Bankrate relied on data from companies such as Zillow, Experian, and ICE Mortgage Technology. Homes that had no mortgage were not counted in the study, indicating that average household leverage is even lower, Kates said.
The ratio of total debt to income was 82 percent in 2024, below the pre-pandemic level of 86 percent in 2019, the Fed reported.
