Originally published Friday, March 14, 2008 at 12:00 AM
Analysis
Home equity losing grip
In 2007, home equity, the value of a home less mortgage and related debt, dipped below 50 percent for the first time since the Federal Reserve...
The Associated Press
In 2007, home equity, the value of a home less mortgage and related debt, dipped below 50 percent for the first time since the Federal Reserve began keeping records.
With home prices weakening and foreclosures at an all-time high, there's little sign this key source of household wealth will recover.
When home values were rising, people could tap the equity for cash. Now, there's less to tap just as credit is tighter and job losses higher.
While the equity has been declining since the mid-1980s, as more people borrowed against their homes, the fourth-quarter fall is mostly due to lower prices. "This is a forced reality check," says Bankrate.com senior financial analyst Greg McBride. "Home prices don't go straight up."
The price decline contributed to the highest foreclosure rate in history in the fourth quarter, according to the Mortgage Bankers Association.
The Standard & Poor's/Case-Shiller index shows home prices lost 8.9 percent in the period. Experts say further declines are likely.
"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," notes Merrill Lynch analyst David Rosenberg. The value of homes, Americans' largest asset at about 39 percent of household net worth, was $20.2 trillion at the end of 2007, even after the decline.
Copyright © 2008 The Seattle Times Company
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New Beginnings Christian Fellowship
Coming in this Sunday's Pacific Northwest Magazine: Pastor Braxton's mission is to preach a message that appeals to everyone.
shopping
events for Tuesday, Nov. 24
- Asher Anson Black Friday and December Sales
- Holiday Sale at Pink Ginger
- Clementine's December Daily Sale
- Shenui.com Holiday Sale
editors' picks
- Local jewelry designers
- Maternity shopping
- Vintage, consignment and used clothing
- Independent bookstores
- Illegal workers quietly let go
- Sprouts, raw fish on attorney's 'do not eat' list
- Jerry Brewer | Jerry Brewer: Seahawks can't lean on the Hutch Crutch now
- Woman stabbed by stranger in North Seattle
- Tattoos at Mill Creek church pierce skin, soul
- UW, WSU once again meet to see who's worse
- Food-safety lawyer's wish: Put me out of business
- Husky Football Blog | Ranking the Pac
- Vikings easily beat the Seahawks
- Tugboat sinks at Seattle waterfront pier
- Illegal workers quietly let go
435 - Bellevue residents blast new bikini espresso stand
241 - Jose Lopez appears to be on his way out
182 - Big demand, grim outlook for state Basic Health Plan
180 - Next Seahawks GM should be Mike Holmgren
136 - Washington State coach Paul Wulff says he's excited about Cougars' future
133 - Some fans at Fort Bragg see themselves in Sarah Palin
75 - Hate crimes against gays, religious groups up, FBI says
68 - Monday practice report
53 - Civil-rights suit against officer, city settled for $87,500
51
- Sprouts, raw fish on attorney's 'do not eat' list
- Tattoos at Mill Creek church pierce skin, soul
- Food-safety lawyer's wish: Put me out of business
- Illegal workers quietly let go
- Architects, chefs find 'kid' within to build Gingerbread Village
- Nicole Brodeur | Homeless woman bent on giving
- Portland cafe's specialty: medical-marijuana tokes
- Hutch gets $10M from Bezos family for immunotherapy research
- Big demand, grim outlook for state Basic Health Plan
- Rediscovering Moab, 'the most beautiful place on Earth'

