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30 THE RISKINESS OF SINGLE HOMEOWNERSHIP A home can be a risky asset, according to the 2019 Unison Volatility Index. e Index includes three major insights, noting that in addition to the riskiness of homes as an asset, the risk is mostly diversifiable. Additionally, the index states that homeowner portfolios are currently too unpredictable, as portfolios have residential real estate risk exposures that are "far beyond the optimum, driven by the banality of very low down payment, high-leverage mortgages." In general, a homeowner's perception of their portfolio volatility is below the actual volatility measured by the index. Homeowners perceive their volatility to be around 9%, compared to actual volatility of 21%. Unison states that the chances of overleveraging on a home are on par with that of an equity index, "especially considering that a homebuyer who borrows 95% of the value of their home is taking 20x leverage on this investment." Additionally, homeowners have the majority of their equity tied up in their home. For the typical homeowner household, a majority of their $156.4k in net worth is locked up in $95.8k of home equity. Despite the benefits of diversifying a residential real estate portfolio almost the entire stock of the $27 trillion in residential real estate value is held as undiversified assets in individual homeowner household portfolios. Unision states that diversifying this risk away, an aggregate of $3 trillion of privately held, household annual portfolio volatility can be eliminated from the U.S. economy. In a given year, the worst 10% of homeowners will lose over 15% of the value of their home, or $32,000 for our typical U.S. household, but with large diversified portfolios of residential real estate, the worst 10% of these well-diversified portfolios can be expected to experience a loss of just over 2%. "ough it isn't practical or desirable to fully absorb all residential real estate risk into a large diversified portfolio, this thought experiment demonstrates the amount of risk that could be reduced and value that could be unlocked if thoughtful financial engineering could facilitate the absorption of at least some of this homeowner household risk into a large institutional portfolio," Unsion states.