Friday, May 15, 2009

Our Vanishing Home Equity

Debt makes good times, great; and bad times, horrible. So equity values in homes have fallen much further than the underlying real estate prices. So far in fact that if this chart is to be believed, we are underwater!

CHART OF THE DAY: Our Vanishing Home Equity:(from Clusterstock)
"Everyone knows that U.S. house prices have fallen almost 30% from the peak. What is less well known is that Americans' equity in those houses--the part that American homeowners actually own--has fallen much further. Why? Because, despite all the foreclosures and write-offs, our total mortgage debt has only dropped slightly from its peak.

When value falls and debt stays the same, equity gets crushed"

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