Georgia's Growth Bodes Well for Long-Term Home Equity

By Richard Barrington
Local Lender Columnist
May 7, 2008
The downward pull of the national real estate slump, brought on by over-speculation and the mortgage crisis, is likely to affect all geographic markets to some extent. However, Georgia's population growth should help its real estate market pull through in the long run, which bodes well for real estate values and home equity as a source of wealth.

Georgia's Growth Figures

Georgia's population is estimated to have grown by 2.2% over the past year. While that might sound like a modest increase, it is enough to rank Georgia fifth out of all the states in the nation over the same period.

In raw numbers, that 2.2% translates to population growth of 94,000 people. That's enough to create a steady demand for housing. Better yet, with a healthy job outlook and the prospect of favorable tax treatment for retirees, this demand might keep on growing.

What This Means for Home Equity

How does all this affect home equity? Demand for housing creates support for home prices. Home equity is the difference between a home's value and the balance remaining on its mortgage(s). Therefore, even with flat home prices, home equity will tend to build over time as people pay down their mortgages. Rising home prices give home equity an extra boost.

Nationally, the overall decline in home prices is eroding home equity--that is, it is shrinking the cushion between home prices and mortgage balances. While overpriced markets will need to correct themselves, in the long run those markets with growing demand for housing will be best positioned to stabilize and start to recover. Georgia's population growth isn't a total antidote for the housing slump, but it does help.

Source:
WCTV

About the Author
Richard Barrington is a freelance writer and novelist who previously spent over twenty years as an investment industry executive.