imagine that you buy a house for $200,000, paying 10% of the price as a down payment and taking out a bank

loan for the remaining $180,000. Over time, you pay off some of your bank loan, so that only $100,000

remains, and the house's value on the market rises to $250,000. At that point, your equity in the home is the

value of the home minus the value of the loan outstanding, which is $150,000. For many middle-class

Americans, home equity is their single greatest financial asset. The total value of all home equity held by U.S.

households was $23.6 trillion as of the middle of 2021, according to Federal Reserve data.

Investment in a house is tangibly different from bank accounts, stocks, and bonds because a house offers both

a financial and a nonfinancial return. If you buy a house to live in, part of the return on your investment occurs

from your consumption of “housing services”—that is, having a place to live. (Of course, if you buy a home and
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