It's not "real" money. It's presumed equity. It only becomes real money for the brief period between when you sell this house and buy the next. As houses around you sell for more, your equity goes up, and when the prices go down, your equity goes down. The problem is amplified when you have a mortgage company who has loans on one side of their books, and the value of the homes on the other. When the value of the homes go down, their books get out of whack and they have to come up with cash to balance the books.
So while the economic and accounting principals that create and support the concept of equity are quite real, equity itself is quite ephemeral.
|