The Great Recession had a tremendous negative affect on the real estate market, but one area in particular is making a rebound.
Home sales, pricing and new construction all suffered from 2008-2011, but one of the most impacted areas for Americans was the loss of equity in existing homes.
For many Americans, the home purchase is the most important investment they will make in their lifetime. Thousands of homes went underwater during the recession, meaning the owner owned more on the home than it was worth.
That trend has been in reverse since 2011, and according to CoreLogic’s latest report on home equity, national home values are on the rise.
“The CoreLogic Home Price Index has recorded a 40 percent rise in the national index since the trough, with some areas up more sharply and other markets showing a more subdued bounce back,” the report said.
The average home in the United States has gained around $11,000 in equity from June 2015 to June 2016, CoreLogic reports.
Alabama homes have gained less than half of that amount, but it is positive news that the state is following the national trend in home price gains.
On average, Alabama homes have gained around $4,000 in equity, CoreLogic said.
CoreLogic says that home equity wealth in the United states has grown to more than twice the level in 2011, where the group estimates 3.6 million homeowners were underwater. That’s a rise from $6.1 trillion in wealth to $12.7 trillion.
“By rebuilding this component of household wealth, the recovery in home equity has helped support consumption spending and renovation expenditures,” CoreLogic said. “While estimates vary, Moody’s Analytics has estimated that for every $100 rise in housing wealth, consumption spending rises roughly two dollars. In other words, a $6 trillion rise in housing wealth has lifted consumer spending more than $100 billion during the last five years.”
Video link for this story: https://www.youtube.com/watch?v=NNCKTZ3J-K0
The graph in the CoreLogic link is also fair use and can be used for this story, credited to CoreLogic.