Frederic Scovell, a Coldwell Banker Residential Broker recently reported an article titled "Equity Position of U.S. Households Improves." Fred reported on the Federal Reserve Board of Governors' recently released statistics on the financial accounts of U.S. households. The release shows continued improvement in the financial position of U.S. households with real estate. In fact, the household real estate equity position improved to a level last reached in the second quarter of 2007.
He found that according to the National Association of Home Builder's tabulations of the quarterly series, the asset value or market value of owner-occupied real estate held by U.S. households increased by $758 billion dollars or 3.9%. The liability total – home mortgages – decreased by $37 billion or 0.4%. The equity position, the difference between assets and liabilities, increased by $795 billion or nearly 7.9%.
Fred points out that the figures provided by the Federal Reserve Board of Governors are not adjusted for inflation. Therefore, it is useful to examine the owners' equity in real estate as a percentage of household real estate. The ratio is calculated by taking the equity position divided by the market value of owner-occupied real estate held by U.S. households. The higher the ratio the more favorable is the financial position of U.S. households with real estate.
Fred states that the current ratio of owners' equity in real estate as a percentage of household real estate is 53.6%. The ratio was last at this level in the first quarter of 2007. The ratio has rebounded rapidly since the first quarter of 2009 when it was at an all-time low of 36.6%.
He found that the quarterly series shows continued improvement in the balance for U.S. households with real estate. This should not be a surprise given the increase in home prices and the low mortgage rates. The continuing improvement in the financial position of U.S. households with real estate is a welcome sign. The improved equity position represents fewer underwater homeowners, thereby unlocking housing supply and demand.
Original Source: National Association of Home Builders
Frederic Scovell is an experienced local real estate agent at the Coldwell Banker Gold Coast office in Chicago, IL. He can be reached at (312) 914-1045. Once you decide to sell or purchase a home, Bradford Miller Law can help you with your transaction at a very reasonable rate. Our experienced Real Estate Attorneys have been representing real estate clients for several years now and have earned membership in the Better Business Bureau. Please feel free to visit our website for information about our firm and information about buying or selling a home. To discuss your pending or potential real estate transaction call us at 312-238-9298 for a Free 15-minute consultation.
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