Homeowners should not expect to make much headway in the years ahead.

Even though prospects for equity accrual have improved slightly in bubble markets, most homeowners will still leave their homes with large amounts of negative equity if house prices return to trend levels. For example, by the year 2012, homeowners in New York will have $101,964 of negative equity and in Los Angeles the shortfall would be $168,069. In these, and other bubble markets, households would benefit from proposals that attempt to provide affordable rental options as part of policy solutions.

For cities where the costs of owning are much closer to rental costs, it is likely that a small amount of equity will be accrued. In these markets, policies that keep owners in their homes, possibly through some form of government-guaranteed mortgage, are preferable.