Wikinvest Wire

We're getting wealthier

Thursday, December 10, 2009

Largely due to the soaring stock market, U.S. household assets rose in value for the second quarter in row following more than a year of declines, up from $64.8 trillion to $67.5 trillion, per the Federal Reserve's latest Z1 Flow of Funds report released earlier today.
IMAGE We are still about $11.5 trillion below the peak reached in 2007, about half of the decline a result of plunging real estate prices and the other half due to lower stock prices. Though the total value of real estate has been rising modestly for the last six months, as clearly indicated in the expanding green area above, the recent improvement is all about stocks.

Household net worth also rose again, up from $50.7 trillion in the second quarter to $53.4 trillion at the end of September.

Interestingly, as more evidence of how much more fleeting asset values are than the corresponding debt, while total household assets declined by $11.5 trillion since late-2007, total household debt fell by only about $300 billion.

As for household's real estate assets and liabilities, the picture is improving, but slowly.
IMAGE You have to wonder where we might go from here, particularly if home prices reverse course and resume their decline as many are expecting. You'd think that, in this case, there would be a similar decline in outstanding mortgages as more bad debt is written off.

Per the data from the graphic above, so far, the dollar amount of outstanding home mortgages has only declined by a little over $200 billion while the overall value of U.S. residential real estate has declined by some $5 trillion.

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2 comments:

Anonymous said...

I'm back up to the peak, all my losses have recovered, all due to stocks and gold.

Anonymous said...

Total real estate net worth includes fully paid off homes, as well as homes that are partially paid off. 100% mortgaged homes are only a subset of the total real estate market. Mortgage debt will never track total home net worth unless all homes are 100% mortgaged.

It was only the small percentage of the population who bought at the peak in bubble areas that are 100 plus per cent mortgaged.

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