Homeowners are sitting on $35 trillion in equity. These 3 stocks could benefit

There’s a homeowner financial tsunami on the horizon, with a reported $35 trillion in home equity in U.S. residential real estate right now, according to the Mortgage Bankers Association.

What’s more, indications are rising that homeowners are itching to tap some of that cash.

A case in point: On July 28, the MBA reported that Total originations of Home Equity Lines of Credit (HELOCs) and closed-end home equity loans rose by 7.2% from 2023 to 2024, according to the MBA’s 2025 Home Equity Lending Study.

“With close to $35 trillion of homeowner equity in residential real estate and many homeowners locked into low-rate first mortgages, HELOCs and home equity loans have become the product of choice for many homeowners,” said Marina Walsh, CMB, the MBA’s vice president of industry analysis, in a statement. “Lenders in our study expect year-over-year growth of almost 10% for HELOC debt and 7% for home equity loan debt in 2025.”

No doubt, soaring home values have boosted home equity funds.

According to Zillow, the average home value in July 2019 was $229,000. It’s currently about $369,000. “That’s a massive jump in just six years, so it’s no wonder that home equity is so high,” said Adam Hamilton, CEO at REI Hub in Richmond, Virginia. “That’s a big reason why so many people are choosing to hold onto their homes for longer, because they know their home values are increasing significantly, and selling means having to buy a new home at a much higher price.”

Higher rates are holding up home equity spending

Homeowners leverage home equity cash for myriad reasons, including paying down debt, home maintenance and remodeling, or even investing in property.

One issue that may be holding more homeowners back from landing home equity loans is interest rates, with the average loan rate for a $50,000 HELOC loan standing at about 7% right now.

That figure may be too high for some homeowners, who prefer to wait for the Federal Reserve to lower interest rates, a move that Fed Chair Jerome Powell has been considering, but not yet implementing. If and when the Fed does curb rates, the home equity floodgates may fly open and pour billions of dollars or more into the U.S. economy.

“If the Federal Reserve decides to pull rates lower, that economic fuel’s getting lit,” said Eric Croak, president of Ohio-based Croak Capital, a fiduciary financial firm with $200 million in assets. “HELOCs, cash-outs, renovations, debt consolidation, even new construction all become accessible again.”

If that’s the case, the U.S. economy could be looking at a consumer spend cycle that is real estate-fueled instead of wage-driven. “That’s different from what we saw in 2020–2021, when COVID-driven federal government stimulus checks and credit card usage floated the economy. Now, home equity is going to feel like found money, and Americans tend to put found money straight back into the system.”

Assuming the Federal Reserve lowers interest rates, home and property experts expect homeowners to quickly tap into the HE cash and set off a home mortgage rate/maintenance boom.

“The pendulum swung all the way in one direction, with a dramatic drop in demand, and we are going to see a tsunami on the back end, with a surge of delayed demand coming through,” said Jacob Naig, owner of Iowa-based We Buy Houses Des Moines. “I anticipate a renaissance in home improvements, secondary dwelling unit builds, and mid-size renovations like basement finishes or kitchen expansions."

Naig said he’s talked to dozens of homeowners who stopped their renovation plans because they were unable to refinance due to high borrowing rates. “Now they’re sitting on $150,000 or $250,000 in tappable equity,” he said. "However, they are unwilling to shell out 8% for the use of the cash. When the Fed makes the path even clearer downward and when we see home equity loan rates below 6% again, there’s no question money will start moving.”

These stocks should stand tall when home equity cash rolls in

Investors looking to get ahead of the home equity leviathan landing on Uncle Sam’s doorstep may want to start kicking the tires on stocks that would directly benefit from the cash infusion. “We’ll likely see a domino effect; contractors, as big-box retailers, appliance makers, and lenders all benefit,” Croak noted.

Which stocks look best-positioned to attract assets from a home equity bonanza? These three stocks should be at the top of any investor’s list.

Home Depot (HD)

Year-to-date performance: -2.76%

As soon as U.S. homeowners begin to utilize their home equity, they’ll need to spend cash to either renovate or update their homes. “This can be encouraging to companies like Home Depot, who will have more customers with more equity who will be keen on investing the money in their homes to add value to their properties,” said Ryan McCallister, founder of F5 Mortgages in Traverse City, Michigan.

Home Depot has struggled to corral more customers in recent years, with high inflation and cautious customers setting the tone. That scenario should change as the economy grows stronger and as home equity funds start to kick in. The demand should accelerate in what is expected to be a $1 trillion U.S. home improvement market by 2027.

Home Depot’s meal ticket isn’t necessarily do-it-yourself consumers — professional contractors comprise 50% of its customers. That figure should rise after Home Depot’s purchase of SRS Distribution, a roofing, landscaping, and specialty building goods company, which could bring more professional contractors to the revenue mix.

PayPal (PYPL)

Year-to-date performance: -20.52%

Yes, PayPal shares are down significantly in 2025, but the company is ideally positioned to leverage the $35 trillion home equity market.

“On the technology side, take a look at PayPal, an alternative payment and finance platform that benefits from people spreading out costs when cash starts flowing,” Croak said.

In its most recent earnings statement, PayPal beat analyst expectations. However, an operating cash flow issue has been holding the stock back, with cash flow of $898 million versus analyst expectations of $1.83 billion.

Even so, Wall Street analyst consensus is bullish on PYPL stock, with analysts calling for an $82 per-share price target, which would represent about a 23% boost from its current $67 share price.

Rocket Companies (RKT)

Year-to-date performance: +46.94%

Rocket Companies' stock is on a heater in 2025, returning 47% for the year to date and 38.8% in the past three months. Q2 revenues were up 5% for the quarter, a period that saw RKT’s acquisition of Redfin, a leading digital real estate marketplace that brings about 50 million monthly users and over 1 million real estate listings to the deal.

Rocket CEO Varun Kirshna cited a “standout second quarter” for the company's most recent share price boost, noting the Redfin deal should be a catalyst for future market growth. The company’s stock has risen 11% since the Q2 numbers rolled out on August 1.

“If lenders can pivot quickly, I’d be monitoring fintech firms like Rocket Companies,” Naig said. “Whoever can streamline the HELOC process for the middle market will win big.