--- title: Homeowners are banking off rising home prices — here’s how - The Hustle description: US home equity reached a record high of $23T in Q2, and homeowners are cashing in. image: https://hs-sbup.thehustle.co/hubfs/The%20Hustle%20News/Assets/Images/973062670-News-Brief-with-Note_2021-11-11T013913.758Z.webp --- # Homeowners are banking off rising home prices — here’s how ![Rob Litterst](https://thehustle.co/wp-content/uploads/2023/01/Rob-Litterst-pic.png?width=48&height=48&name=Rob-Litterst-pic.png) [Rob Litterst](https://hs-sbup.thehustle.co/author/rob-litterst) [Rob Litterst Twitter profile ](https://twitter.com/robbylit) Published: November 11, 2021 Updated: October 11, 2023 Home equity is the difference between the value of a home and the amount still owed on it. ![Homeowners are banking off rising home prices — here’s how](https://hs-sbup.thehustle.co/hs-fs/hubfs/The%20Hustle%20News/Assets/Images/973062670-News-Brief-with-Note_2021-11-11T013913.758Z.webp?width=595&height=400&name=973062670-News-Brief-with-Note_2021-11-11T013913.758Z.webp) If the value of a home stays flat, home equity rises slowly — one mortgage payment at a time. But if the value of a home rises quickly, the amount of equity jumps along with it. That exact scenario is playing out all over the country, with rising home prices [pushing](https://www.forbes.com/sites/kathleenhowley/2021/11/08/americans-cashing-out-home-equity-after-record-gains-in-value/?sh=518c72332005) US home equity to a record high of **$23.6T** in Q2 — leading homeowners to cash out their equity at record levels as well. Per *Bloomberg*, US homeowners [logged](https://www.bloomberg.com/news/articles/2021-11-08/home-equity-loan-rates-incentivize-homeowners-to-invest-in-renovations-stocks?sref=3Ac2yX40) 1.1m+ **cash-out refinances*** in Q2, and are using their newfound cash to pay for renovations, invest in stocks, and probably buy NFTs. So how’d the market get so frothy? #### **It all started in March 2020** When the pandemic struck, the federal government took [several steps](https://www.reuters.com/business/feds-bond-buying-timeline-roaring-entry-boring-exit-2021-11-02/) to stabilize the economy, including embarking on a massive bond-buying program. The program sent mortgage rates downward, kicking off a virtuous cycle: 1. Lower mortgage rates opened the doors to more buyers 2. More buyers led to bidding wars and higher purchasing prices 3. Investment firms (e.g., BlackRock) and iBuyers (e.g., Zillow, Opendoor) snatched up inventory, pushing prices even higher 4. Higher prices drove up valuations for surrounding homes As a result, home prices jumped by 11% in 2020, then 17% in 2021. #### **But the cycle could be ending soon** The Federal Reserve plans to wind down its monthly bond purchases before ending them in mid-2022. The move would likely push mortgage rates higher, putting a damper on the current cycle. However, some analysts [believe](https://www.yahoo.com/now/why-won-t-see-housing-193210865.html) the housing market will stay hot — claiming a shortage of inventory with sustained demand could keep current prices intact. Even if prices do fall a bit, it could bring sidelined buyers back into the mix, pushing prices up again and kicking off a new cycle of refinancing. **GLOSSARY** ***Cash-out refinancing:** A type of mortgage refinancing option where homeowners get to pocket cash in exchange for taking on a larger mortgage.  Topics: [Economy](https://hs-sbup.thehustle.co/tag/economy) [Housing And Real Estate](https://hs-sbup.thehustle.co/tag/housing-and-real-estate) ## Follow us on social media prev next - ![Why tech workers are sleeping in expensive boxes](https://hs-sbup.thehustle.co/hubfs/The%20Hustle%20News/Assets/Images/1611893784-httpsthdaily.s3.us-west-1.amazonaws.comfinal_size-brownstone-pods_20231002232126.webp) ### Why tech workers are sleeping in expensive boxes - ![Apartments are getting built at a record clip — it’s too bad they aren’t the right kind](https://hs-sbup.thehustle.co/hubfs/The%20Hustle%20News/Assets/Images/503692535-httpsthdaily.s3.us-west-1.amazonaws.comfinal_size-Apt-Construction_20230910231429.webp) ### Apartments are getting built at a record clip — it’s too bad they aren’t the right kind - ![Will the Bay Area get a new city?](https://hs-sbup.thehustle.co/hubfs/The%20Hustle%20News/Assets/Images/1030627733-httpsthdaily.s3.us-west-1.amazonaws.comfinal_size-houses_20230827234703.webp) ### Will the Bay Area get a new city? - ![Looking for an edge in attracting talent? 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Signup for a free account Close modal ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Rob Litterst", "url" : "https://hs-sbup.thehustle.co/news/author/rob-litterst" }, "datePublished" : "2021-11-11T09:46:02.000Z", "headline" : "Homeowners are banking off rising home prices — here’s how", "image" : [ "https://hs-sbup.thehustle.co/hubfs/The%20Hustle%20News/Assets/Images/973062670-News-Brief-with-Note_2021-11-11T013913.758Z.webp" ], "mainEntityOfPage" : { "@id" : "https://hs-sbup.thehustle.co/news/11112021-us-home-equity", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject" } } } ``` ```json { "@context" : "https://schema.org", "@id" : "#article", "@type" : "NewsArticle", "author" : { "@type" : "Person", "name" : "Rob Litterst", "url" : "https://hs-sbup.thehustle.co/author/rob-litterst" }, "dateModified" : "2023-10-11T20:29:14+0000", "datePublished" : "2021-11-11T09:46:02+0000", "headline" : "Homeowners are banking off rising home prices — here’s how", "image" : [ "https://7355427.fs1.hubspotusercontent-na1.net/hubfs/7355427/The%20Hustle%20News/Assets/Images/973062670-News-Brief-with-Note_2021-11-11T013913.758Z.webp" ], "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "height" : 112, "url" : "https://fs.hubspotusercontent00.net/hubfs/53/assets/hubspot.com/web-team/WBZ/Blog%202021/Images/Logos/HubSpot%20Logo%20112X112.svg", "width" : 112 }, "name" : "HubSpot", "sameAs" : [ "https://www.facebook.com/hubspot", "https://twitter.com/hubspot" ], "url" : "https://www.hubspot.com" }, "speakable" : { "@type" : "SpeakableSpecification", "xPath" : [ "//title", "/html/head/meta[@name='description']/@content" ] } } ```