Home Equity Losing Grip

Seattle Times (03/14/08)
Home equity has been falling for the past two decades, dipping under 50 percent in the fourth quarter, according to the Federal Reserve. Experts attribute the decline to falling residential prices, with the Standard & Poor's/Case-Shiller index recording an average drop of 8.9 percent during the October-through-December period. Merrill Lynch analyst David Rosenberg remarks, "The combination of a huge slide in property prices and more mortgage debt took homeowner equity down a record $287 billion in the fourth quarter." Additionally, the Mortgage Bankers Association reports that a record high foreclosure rate during the period can be attributed in part to depreciating home values. Nationally, residential properties accounted for 39 percent of household net worth and were valued at $20.2 trillion in the fourth quarter.