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According to Javier Silva, a senior research and policy associate with Demos, a New York think tank and public policy organization, homeowners' equity fell from an average of 68.3 percent to 55 percent between 1973 and 2004. Americans now own a smaller stake in their homes than they used to. In the 1950s, they owned nearly 80 percent.

 

If real estate appreciation slows or declines, homeowners without equity that is firmly established may find themselves owing more than their houses are worth.

According to a Demos study, Americans from 2001 to 2003 cashed out $333 billion in equity from their homes. Many did so to pay off credit card debt and finance ongoing living expenses -- both good and noble financial causes.

 

The study concluded that Americans own less of their homes today than they did in the 1970s and early 1980s.

Professor Robert Frank of Cornell University, the author of Luxury Fever, compares conspicuous consumption in an economy like ours to the military arms race, and we already know that's destined to end in mutually assured destruction.

 

The key to countering this headlong rush towards ever-more expensive disappointment is to switch from conspicuous to inconspicuous consumption.

"Appraisal fraud is part of a bigger, more ominous picture," says David Callahan, Home Insecurity author and Director of Research at Demos. "As home prices have continued to increase above inflation, even nearing 20 percent per year in some cities, American homeowners are vulnerable as never before to financial ruin if home prices fall to their natural market value."

 

"To make matters worse, an increasing number of Americans have reduced the equity in their home to meet rising living expenses, like education and health care, or to pay off credit card debts.

Hefty heating bills will take the biggest bite out of the finances of households that are already struggling.

"The Plastic Safety Net" study found that middle- and low-income households were racking up credit card balances just to cover everyday expenses. One-third of the 1,000 survey respondents said that basic living expenses contributed to their current debt level.

Last week, New York-based consumer action group Demos and the Center for Responsible Lending released findings from a new report, "The Plastic Safety Net: The Reality of Household Debt in America." The survey results found that 7 out of 10 low- and middle-income families are using their credit cards as a safety net, relying on credit to pay for car repairs, basic living expenses, medical expenses or house repairs.

 

Households that reported a recent job loss or unemployment, and those without health insurance, were almost twice as likely to use credit cards fo

One-third of low- and middle-income consumers are using their credit cards to pay basic living expenses - including their monthly mortgage, according to a new study.

 

CRL and Demos also found that even though consumers are using home-equity loans to pay down their credit cards, many households are still carrying huge card balances, increasing their overall debt levels.

The average credit card debt of low- and middle-income indebted households was $8,650, according to the study from Demos and the Center for Responsible Lending.

 

The more stringent law comes at a tough time for American consumers. A survey released last week showed that total credit card debt now stands at about $800 billion. That is up 31 percent since 2000