Bloomberg’s Mark Whitehouse reports on some encouraging news for U.S. homeowners, based on December data from the Federal Reserve.
A giant housing-debt hangover has been one of the main culprits behind the U.S. economy’s lackluster recovery from the 2008 recession. In one encouraging sign, new data from the Federal Reserve suggest that American homeowners might finally be getting out from under it.
Homeowners have reached a sort of milestone – thanks to a combination of mortgage defaults, modifications, old-fashioned thrift and a multi-year rebound in house prices. As of September, their equity stood at $12.4 trillion, or 56.7 percent of home values, the highest level since the housing bust began in mid-2006. What’s more, according to data provider CoreLogic, the share of underwater owners has fallen to less than 9 percent.
Now the question is whether the regained housing wealth will spur people to start spending again. With tight mortgage credit preventing the kind of cash-out refinancings that characterized the boom years, equity might not be as powerful as it was. That said, the feeling of being whole again could certainly help.
