Housing Wealth Lost: $6 Trillion!

According to Peter Viles, a senior producer for Real Estate at LATimes.com, the wealth homeowners have built up through owning a home is going down the tubes. $85,000 is the magic number that the average homeowner has lost in terms of home wealth this year alone, and it’s only going to get worse.

I was going to do some research to see what $6 Trillion could buy, but I don’t think that’s an avenue I want to go down. Instead, it occurs to me that while homeowners are getting hit in the pocketbook with the value of their homes going down, it should only hurt if the homeowner bought sometime in the past few years, when home prices were soaring and seemed like they’d soar forever.

If you bought your home at, say, $300k, and it’s now worth $400k after climbing to $500k or more, then you’re still up, even if you’re not swimming in it. I don’t think that’s so bad, especially if you’re paying on a 30-year fixed rate mortgage. If, however, you bought your house for $300k, and it’s now down to about $225 or so, I feel for you. You may want to walk away from your mortgage, and I’m not so sure I’d blame you. Not responsible, of course, but from your perspective, times are tough. You’re paying more than your home is worth, and that’s no fun.