Home equity numbers staggering, report says

California’s housing boom has generated $1 trillion in increased home equity since 2000, pumping billions of dollars into the state’s economy, according to a new report from the California Building Industry Association.

The report, prepared by CBIA Chief Economist Alan Nevin, also found that for those who owned their single-family home in 2000, the median equity gain, exclusive of down payment, was $230,386, while condominium owners saw their home equity increase by a median of $200,544.

“For the person who owned a single-family home in the year 2000 and bought that home with a 15 percent down payment, their return on equity would be approaching 1,000 percent,” Nevin said.

“Economists and housing experts have known for years that homeownership is the leading source of wealth creation for the vast majority of Americans. Now we have a better feeling for just how much wealth home ownership has created here in California.”

Nevin added that much of this equity has already been plowed back into the economy through refinancing, allowing homeowners to buy goods and services they wouldn’t have been able to afford otherwise and helping keep California’s economy growing.

The study, released at a press conference at The Premier Building Show, found that the 2.5 million homes purchased since 2000 have seen an increase in value of $378.69 billion, while the 4.3 million homes owned but not sold in that time period have increased in value by $641 billion.

The total gain in home equity was more than $1trillion..

Homes sold in the San Francisco Bay Area and Los Angeles County have appreciated the most ––$83.24 billion and $82.16 billion respectively.

Nevin said despite the steep increases in home values, he doesn’t foresee a housing “bubble,” as some have speculated, because the underlying demand for homes remains strong while the supply–

constrained by governmental bar

riers, slow-growth pressures and

other factors–remains inadequate

to meet the demand.

He does see the rate of appre

ciation slowing to more sustain

able and healthier levels, however.

“Rates of gain will not go up

as fast as they have in the last three

years,” he said. “We anticipate that

over the next three years, the ap

preciation rate will be in the five

to eight percent range per year.”