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With all the bad news about underwater home owners and strategic walkaways, you might think that American home owners’ equity holdings are in the tank. But the least-publicized recent statistic on real estate is that, despite these scary reports, home equity is again on the rise. According to the Federal Reserve’s most recent “flow of funds” survey, home owners’ net equity grew by nearly $1 trillion from the recession’s nadir in the first quarter of 2009 through the third quarter. From June 30 to Sept. 30, net equity rose by $418 billion. That’s not all that impressive compared with the quarterly increases during the hyperinflationary housing boom years, but it could signal something important. After three years of unprecedented shrinkage in home equity — and three years of rapid expansions in the number of underwater borrowers with negative equity — there are signs that the down cycle may be shifting. (www.washingtonpost.com) Washington Post (2/13/10); Kenneth R. Harney
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