Monday, April 23, 2007

WSJ: Home Equity Is Rising Source of Spending says Greenspan Paper

by Bill McBride on 4/23/2007 12:53:00 PM

From the WSJ: Home Equity Is Rising Source Of Funds, Greenspan Paper Says

Housing equity served as a growing source of funds for U.S. consumer spending between 2001 and 2005, financing close to 3% of total personal consumption expenditures, according to a paper co-authored by former Federal Reserve Chairman Alan Greenspan.

In the paper, posted on the Fed's Web site Monday, Greenspan and Fed Economist James Kennedy estimate that between 1991 and 2005, equity extracted through home sales, home-equity loans and cash-out refinancings freed up about $530 billion per year in cash available for other uses, such as consumption and debt repayment.
The paper provides new estimates on how MEW is used. However, the paper does not provide data after Q3 2006.