Realtor provided a commentary by Lawrence Yun, the National Association of Realtors (NAR) respected chief economist. Yun stated that U.S. GDP is still below 2007 levels, even though we have 10 million more in the “workable age of 16 and over.” Yun said, “In short, it seems like “’Progress in America” has stopped.” He continued, “Aside from the lack of enthusiasm among large companies, one major reason for the economic struggle is that small businesses – the entrepreneurial heart of America – cannot find funds either to establish themselves or to keep going.” Yun explains that home equity is a source for many business start ups or expansions. That equity stands at, “$6.1 trillion versus $13 trillion in 2006 according to Flow of Funds data from the Federal Reserve. The Census Bureau reports that there are 74 million homeowners. So on average, the average equity per homeowner in 2011 is $82,000, down from the $170,000 in 2006.” Yun explains that median homeowner net worth is $190,000 compared to $4000 the median net worth of a renter household, according to the Census Bureau. Economic recovery thus largely depends on housing price recovery, and any moves by the federal government that hamper that recovery – such as removing the mortgage interest deduction – or advances the home value can impact the economy significantly.
(photo credit: Realtor)