This past weekend we hit the out-of-our-control milestone of $250K equity on our house. The last time that happened was 2007, but it plummeted. House is now valued at $55000 below peak, and we owe $55000 less than we did at that time. I used to believe that for every dollar of mortgage principal paid, the house equity would rise by an amount larger than a dollar. That's how it should work. Is our house overvalued? I don't think so. Everybody's house in our area was overvalued in 2006. The people who purchased between September and November 2006 have just this year achieved positive equity, after an excess of $65000 principal has been paid over seven years. If we'd the average 4% rise in home value over the last twelve months instead of the absurd 20% leap I'd probably be making the $250000 equity crowpost in summer of 2015, with an interest rate of 3.75% and a payoff date of August 2023.

And if no boom or bust cycle happened at all, with logarithmic growth of 4% annually, we'd have the $250000 equity benchmark in March 2014, owing $37000 more than we owe now, assuming 30 year mortgage and 6.625% interest, and a final payment due February 2029.

This tells me our area still hasn't fully recovered. This is why people who've seen boom and bust real estate cycles do not use their primary residences as ATMs.