Some Belated Holiday Cheer

The holidays have come and gone but, in the spirit of holiday cheer and in an effort to begin the New Year on an optimistic note, I thought I'd share some "let's put some things in perspective" news I found in the December issue of The Real Deal.

True, housing starts are down nationally and, in fact, many regions of the country have experienced price declines over the last several months. However, Ken Harney, notes several reasons for optimism in his December Real Deal column. Consider, for example:

• Despite the recent fall in both prices and sales, (in some markets) the overall upside of five years' worth of boom has been a positive one for the American homeowner. Harney, notes that, overall, the total equity owned by American homeowners is still at near-record levels, topping out at almost $11 trillion. (Total equity holdings, he notes, refers to the difference between the market value of the entire residential market, which is $21 trillion and outstanding mortgage debt, which is approximately $10 trillion.) So, then, American homeowners have more money tied up in their homes than (almost) ever before.
• Even in hard hit areas such as South Florida, most homeowners and homebuyers through most of the boom are still way ahead of the game. In South Florida alone, for instance, home values increased a whopping 130 percent between 2001 and 2006. Thus, even accounting for the double digit drops in prices over the last year, the net out for most homeowners in the region remains robust.

The sub-prime lending crisis is, of course, throwing the emergency brake on a train that was already slowing down, but, with the exception of those that bought late in the cycle, Harney counsels American homeowners to look at the bust within the light of the overall (significant) gains which were made in the first part of the decade.

And if that news doesn't perk you up, there's always that leftover egg nog in the fridge...