Massive Mortgage Equity Withdrawal
Former Federal Reserve Chairman Alan Greenspan and Fed economist James Kennedy recently released a report detailing just how much equity American consumers have been withdrawing from their homes over the past five years. From 2000 to 2005, homeowners took out an average of $1 trillion in cash from home equity annually.
According to the team’s estimates, Americans derived an average $997.4 billion in cash a year from 2001 to 2005 through home sales, home-equity loans and refinancing loans. The amount rose to $1.43 trillion in 2005, more than double 2001′s $626.9 billion. About two-thirds of the cash came from home sales.
This chart from the Federal Reserve brings home the point that Americans are owning less and less of their homes.
