For tens of millions of Americans the principal asset that they own is their home. It is part of their lifetime savings. So rising home values is a GOOD thing, not a bad thing in terms of the financial condition of American households.

The chart below shows that Americans now hold a combined $35 TRILLION of equity in their homes – or more than the value of all publicly-traded businesses in Europe. Adjusted for inflation, home values have increased nearly 10-fold since 1960.

To argue that rising home values are bad because this makes purchasing a new home more expensive would be like saying that a booming stock market is bad because it makes stocks more expensive to buy.

The one thing worse than rising home values is DECLINING home values. If you don’t believe us, ask people who owned homes in Detroit 30 years ago and their equity often went from more than $100,000 to $25,000 or less.

Young Americans who complain about the “affordability crisis” don’t seem to understand that most of this tens of trillions of dollars of home equity will eventually be turned over to them – and sooner than they think.