By Kenneth R. Harney
Los Angeles Times
If you’d like to discuss real estate matters, contact Rose Law Group Founder Jordan Rose, jrose@roselawgroup.com
With all the nail biting over fiscal policy and the economy in the closing weeks of 2012, you might have missed some of the positive trends under way for real estate.
Start with home equity. It’s growing again significantly after five years of declines and stagnation. This is a huge piece of good news that hasn’t received much attention. After hitting a low of $6.45 trillion in the final three months of 2011, Americans’ combined home equity jumped nearly $1.3 trillion during the next nine months to $7.71 trillion — a 20% gain — according to the “flow of funds” quarterly estimate released in December by the Federal Reserve.
A homeowner’s equity is the difference between the market value of his or her house and the amount of mortgage debt it is carrying. If your real estate would sell for $400,000 and you have a mortgage balance of $200,000, your equity is $200,000.
Equity is a key measure of wealth — often the largest single item on a family’s financial balance sheet — and the Federal Reserve tracks the estimated equity holdings of millions of owners to come up with its quarterly numbers. As recently as 2007, homeowners’ collective equity exceeded $10.2 trillion. Between that year and late 2011, owners lost nearly $4 trillion in real estate wealth.
So the $1.3-trillion turnaround during the first nine months of 2012 was a big deal.
