A new statistic hints at the shift of homeownership from having a piece of private property to the home as an investment: Americans have nearly $6 billion in home equity.
Homeowners now have a collective $5.8 trillion in tappable equity, the highest volume ever recorded and 16 percent above the last home price peak in 2006. The average homeowner with a mortgage gained $14,700 in tappable equity over the past year and has $113,900 available to draw. This is the amount over and above 20 percent of the value of the average home…
More borrowers are doing cash-out refinances, even at a higher interest rate, because they are leery of the variable rates on HELOCs. But overall, just 1.17 percent of available equity was tapped in the first quarter of this year, the lowest amount in four years. Why? They may not know just how rich they are.
What good is an investment if the owner is not cashing in on it? Seriously though, suggesting that Americans are sitting on a pot of gold – their own homes – is an odd proposition. Should they all sell at once? Already, some have wondered what happens when large numbers of Baby Boomers want to be out of their homes. All get home equity lines or credit or cash out refinances? This could drum up more business for lenders but may not necessarily be good for the homeowners. Or, the as the article hints at, what if housing values drop after large numbers of people tap into their equity? We have seen what can happen there by looking back at the late 2000s with many foreclosures and underwater homes.
All together, all that equity may actually be fairly hard for everyone to benefit from.
The term “smart growth” has been around now for several decades. Kaid Banfield argues that the term needs some updating to include more recent concerns. After listing the principles from The Smart Growth Network, Banfield suggests a few things should be added:
Notice anything missing in those principles? I do. There’s nothing explicit about equity, health, food, water, access to jobs, parks, energy, green technology, and more – many of the things that have come to the forefront of community and environmental interests in 2010 were simply not on our minds in the 1990s or, if they were, not to nearly the same degree. If we want to stay relevant, and honest and true to the issues that confront us and the people we represent, we need to do some updating…
[T]oday we confront a very different set of trends than we did in the 1990s. In fact, I would say that we have made so much progress on these things – with market forces on our side, now, too – that we who like to think of ourselves as “progressive” risk being anything but, if we don’t turn some attention to the issues that have emerged in the 21st century.
My quick thought about these suggestions as a whole is that they are a call for making more explicit the goals or aims of the smart growth movement. If you look at the original principles, such as “Mix land uses,” it is not immediately clear why one should pursue this. But if a later principle then stated goals about equity or preserving the environment, the link between practice and intentions (and how they would affect the lives of people) would be more explicit.
It would be interesting to trace how some of Banfield’s suggestions, like equity, have developed over time. What is the narrative among planners and thinkers over time regarding how to make sure there are “communities of fairness and opportunity?” How does a narrative like this resonate with Americans?
h/t The Infrastructurist