In just a short two years, the nation’s property owners have accumulated nearly $4 trillion in housing wealth. During the harsh downturn, $7 trillion was wiped out. As a result, the housing market is still in recovery mode and not an expansion mode. There are still underwater homeowners, but those who bought from 2009 and onwards are enjoying positive net worth.
While property values have been rising, the overall mortgage debt outstanding has been falling. At the end of 2013, there was $9.3 trillion in mortgage debt. Several years ago, the total mortgage debt was $10.5 trillion.
Higher real estate values combined with falling mortgage debt has raised the overall equity portion in real estate to 52 percent of the total real estate value, a substantial increase from the 36 percent of a few years ago.
Given that the total number of renters has been rising while that of homeowners has not over these periods, one may say that the housing wealth train has already left the station without young first-time homebuyers. Has Washington’s fiddling over new federal mortgage rules, which has confused many small lenders, and major lawsuits against big banks to some degree unwittingly backfired?
Lawrence Yun is Chief Economist and Senior Vice President of Research at NAR. He directs research activity for the association and regularly provides commentary on real estate market trends for its 1 million REALTOR® members.