Housing Wealth Effects and the Course of the US Economy: Theory, Evidence, and Policy Implications

Eric Belsky

W08-7: Housing wealth soared in the United States from 2000-2005. After tracking real income growth closely for at least the previous 30 years, house price appreciation catapulted ahead of income growth. Apart from a brief period during the dotcom bubble, home equity has long been the largest single component of household net worth and commanded a record share by 2005. Moreover, because stock wealth is more concentrated than housing wealth, home equity is vital to more Americans‚Ķ