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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Les H who wrote (76243)4/19/2007 1:31:58 PM
From: Les HRead Replies (1) of 306849
 
Amazing Development

Their research showed an amazing development. Between 1995 and the final quarter of 2005, equity withdrawal grew to 8 percent of the economy from 1 percent -- a whopping 800 percent increase. And as of the fourth quarter of 2005, when total MEW had reached its peak, it stood at $1 trillion annualized.

Also revealing was the way the Fed broke down the withdrawal data into three categories: housing turnover (the equity released when a homeowner sells a house and often plows the capital back into a new home) home-equity extraction, and cash-out refinancing.

This breakdown was helpful because it is the latter two categories that are most likely to drive spending. Goldman Sachs termed these two elements ``active MEW.''

On that score as well, the Fed data showed an amazing expansion. In 1995, active MEW had been $37 billion. By the fourth quarter of 2005, it soared to $532 billion annualized, a 17-fold expansion.

quote.bloomberg.com
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