NEW YORK–The 2006-2009 housing slump reduced wealth by $7 trillion.
Since that time, however, the value of homeowners’ equity in real estate has more than doubled from a low in the first quarter of 2009, according to a new report from the Federal Reserve, and will reach a new record as early as the second quarter, said economists at the Federal Reserve Bank of St. Louis and Pantheon Macroeconomics Ltd.
“The increase in housing wealth is a kind of stealth offset to falling stock prices,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics, who predicted the record home equity values next quarter. “Home ownership is much wider than stock ownership. The consumption effect from a given rise in holdings has been bigger for homes.”
The analysis found that some cities, including Charlotte, are already seeing prices at all-time highs. Home values in Dallas, Denver, and San Francisco and Portland, Ore., all hit records in December, while they’re down less than 1% in Boston from an August peak, according to S&P/Case-Shiller indexes. About 38% of 87 U.S. metropolitan areas were in record territory last year, according to RealtyTrac.