First, let's clear up what is meant by "Principal Applicant". US Citizens are "Petitioners", never applicant's or principal applicants. Each parent is a "principal applicant". Second, equity in the primary residence is not considered to liquid. This is made very clear in the I-864 instructions.
Third, really should be first. The petitioner is not applying for anything (said that already) and his parents are not applying for green cards. They are applying for immigrant visas. Yes, their wealth can be documented and stated. The I-864 instructions describe how to do this. Become an A-Student of those instructions. Not having done so already is why you are in this pickle. Just meeting the minimum for assets will never work, no matter how liquid they are. If you're not well over that amount using the immigrant's assets, you'll need a joint sponsor.