The explosion in housing wealth - what does it mean?

 

Forget about the stock market as a wealth creator. The housing market is generating a huge increase in household wealth, which should make everyone happy. However, this gain may come from the huge housing bubble, which has exceeded the bubble from before the GFC. So there is a bubble, and households may feel wealthier, but there is a catch. You cannot convert that wealth easily into cash unless you sell the home. The result is that households may have more wealth, but they cannot consume that wealth, and there is a likelihood that the value of that wealth will fall when you want to monetize it.