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Americans’ percentage equity in their homes has decreased to a new low, according to data released by the Federal Reserve last month.
Homeowners’ equity fell to 41.4 percent of the total value of household real estate at the end of the first quarter of 2009. This percentage has decreased sharply since the end of 2005. It first fell below 50 in the fourth quarter of 2007 – marking the first time that homeowners’ mortgage debts exceeded their equity in their homes since 1945, when the Fed’s data begin. 
The total value of household real estate fell for the ninth straight quarter, to $17.9 trillion. It has fallen by 18 percent since the end of 2006, when it reached a historical peak of $21.9 trillion. Homeowners’ percentage equity has been decreasing for decades. Until recently, the decline was attributable to increased borrowing, as households relied on ever-larger mortgages to buy their homes and used home equity loans to finance other spending. The total value of such debt doubled between 2001 and 2007. Since 2007, however, this borrowing has slowed and some mortgage debts have been written off as a result of foreclosures. Thus, the sharp drop in homeowners’ percentage equity since then is attributable not to increased borrowing, but entirely to the unprecedented downturn in the market value of homes.
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