Homeowners Have $17.8 Trillion in Home Equity — Why Do They Still Feel Pinched?
Written by
G. Brian Davis
Edited by
Brendan McGinley
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An August study by the ICE Mortgage Monitor found that U.S. homeowners enjoy record-high home equity of $17.8 trillion. Yet many of those homeowners feel increasingly pinched by today’s economy. A 2025 survey by Unlock.com found that over half (54%) of homeowners say they are feeling uncertain or pessimistic about the economy, and 40% say they feel worse off financially than they did a year ago.
Here are some prevalent causes why high-equity homeowners still feel squeezed.
Paper Wealth vs. Cash Flow
Sure, it feels nice to have equity in your home. But it’s hard to pay for groceries with it.
That wealth exists only on paper until you sell your home to realize it. You can borrow against it of course — but that only adds more debt and monthly payments, squeezing your cash flow even tighter.
Compounding the pinch, many Americans have seen inflation rise faster than their paychecks. Four months of falling job growth, reported by the BLS, doesn’t boost many workers’ optimism for pay hikes, either.
Lock-In Effect
Millions of U.S. homeowners borrowed mortgages at low interest rates during and after the pandemic. A report released by Redfin in September showed 80.3% of U.S. homeowners enjoy mortgage rates below 6%. Over half (52.5%) have a rate below 4%.
“Tapping equity by refinancing or home equity loans isn’t exactly appealing, with mortgage rates hovering near multi-decade highs,” said Oren Sofrin, real estate expert with Eagle Cash Buyers. “A cash-out refinance could add hundreds or even thousands of dollars to a homeowner’s monthly payments.”
Today’s higher interest rates make homeowners reluctant to sell as well, knowing that they’d have to take out a new higher-interest loan. In fact, that lock-in effect has led to tight housing inventory over the last two years, as homeowners remain loath to give up their cheap mortgages — even if they’d prefer to move.
Lack of Emergency Fund
Michael Micheletti of Unlock.com said that home equity is no substitute for emergency savings.
“We know that more than a third of homeowners have less than $1,000 in emergency savings,” he said. “They may be sitting on a lot of home equity, but that does not provide immediate cash at hand.”
If your car breaks down and needs a $2,500 repair, and you only have $500 in the bank, you’re going to feel pinched no matter how many hundreds of thousands you have in home equity.
Options for Squeezed Homeowners
As mentioned above, you can of course refinance or borrow a second mortgage at today’s higher rates.
Homeowners could also leave their cheap primary mortgage in place and borrow a HELOC. Home equity lines of credit only charge you for the balance you carry, like a credit card. You can draw money on it as needed, then quickly repay it to minimize the interest.
Or you could sell to realize your gains that way. But you’ll still need a place to live, and if you buy, you’ll likely pay a higher mortgage rate. If you’re willing to gamble on lower interest rates in a year from now, you could rent for a year before reentering the housing market.
Alternatively, you could turn to newer options like home equity investments (HEIs).
“With an HEI, homeowners receive funds upfront in exchange for sharing a portion of their home’s future value,” said Michael Gifford of HEI company Splitero. “This allows them to access the wealth they’ve built while keeping monthly expenses manageable — a valuable option in a high-rate environment.”
That provides immediate relief from your cash crunch. But you also give up a share of your home equity, leaving you with less long-term wealth.
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