Rising home prices have moved 1.3 million homes from being upside down on their mortgages to a position of equity for their owners. 600,000 of these occurred last month. There are still 10.8 million homes underwater, but the healing in home equity is certainly underway. While 2014 will likely cause a setback in the positive momentum and it may take a few years before the healing is complete, we are definitely on our way to restoring equity to homeowners. This is obviously good news.
The trend also answers a question I was asked at a Vistage All-City meeting today. The question was a recent article that purported that the current 20-somethings were not going to be interested in home ownership, and therefore future general economic recoveries would not involve the housing industry. My answer was that the current 20-somethings would see home prices going up and therefore and want to participate in equity creation. They would also see rising rental rates and realize they can fix their living costs while creating equity. I believe today’s 20-somethings will do the smart thing and start buying homes, helping to fuel the US economy after the 2014 recession.