Affordable Housing, Reports and Publications

Decreased Home Values Drag Down Median Household Net Worth

 

A study financed by the Russell Sage Foundation has found that the net worth of a median American household declined from 2003 to 2013 primarily because the value of their largest assets – their homes – significantly declined in value and have not recovered as quickly as other assets.  The net worth of a household at the median point of the wealth distribution, was $87,992 in 2003.  By 2013, the value of a household at the median had dropped to $56,335.  That is a 36 percent decrease in net worth.

Unlike wealthier households, which own securities that have not only returned to pre-Recession levels but continued to increase in value, the net worth of households at the median decreased primarily because their homes, their largest asset, decreased in value and have not recovered. The reasons they have not recovered vary, but have largely been because of an oversupply of homes being chased by demand slackened by tighter lending standards, debt carried by would-be buyers that prevents them from seeking or qualifying for mortgages, and changes in lifestyle that make single-family homes less attractive to younger households. 

For median households, most of the decrease happened since the start of the recession in 2007.  Before 2007, the net worth of the median household had been increasing, with much of the gain for many coming from the increasing value of their homes.

The study also looked at net worths of households in the 95th percentile, households that have more wealth than 95 percent of the population.  At that level, net worth increased 14 percent over the same 10-year span.  Research by Edward Wolff, an economist at New York University, shows an even larger increase in net worth for the wealthiest one percent of households.

Read about it in the New York Times

Click here to access the full study. 

 

 
 

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