Census: Drop in Net Worth Echoes Home Equity Loss

New comparative tables from the 2010 Census underline both<bthe importance of homeownership to building wealth and the havoc wrecked by thernrecession on that wealth.       The CensusrnBureau released detailed data on the type and value of assets owned by U.S. householdsrnin 2005, 2009, and 2010.  We arernpresenting a summary of the 2005 and 2010 figures based on actual numbers notrnadjusted to 2010 dollars.  All numbersrnrepresent U.S. medians.</p

The net worth of U.S. households was $93,200 in 2005, but hadrndropped to $66,740 by 2010, a decrease of $26,460 or 28 percent.  Of this decline, $20,000 or 75.6 percentrncould be attributed to loss of equity, from a median of $100,000 to $80,000rnover the five year period.  Thusrnhousehold net worth, outside of home equity, declined from $18,150 to $15,000.</p

The median value of stocks and mutual funds declined fromrn$24,600 to $18,400, however the value of IRA/KEOGH accounts from increased fromrn$23,000 to 30,000 and 401K & Thrift Savings from $25,000 to $30,000.  Rental property equity declined, but not asrnseverely as the primary residence of households, from $10,000 to $170,000.  Other real estate equity was up marginallyrnfrom $74,000 to $75,000.  </p

It is important in analyzing the figures to recognize thatrnnot all respondents owned a home or any of the other assets included in thernsurvey.  The differences in numbers reflectrnchanges in the population of those who do have such assets.</p

There were marked differences in how households fared overrnthe five years by race and age.  Whiternnon-Hispanic households saw their net worth drop from $130,350 to $110,729 andrnthe equity in their home from $100,000 to $84,000.  Black and Hispanic households lost more thanrnhalf of their net worth with Black wealth dropping from $11,013 to $4,955 and equityrnfalling $70,000 to $50,000.  Hispanicrnhouseholds went from a net worth of $17,078 to $7,424 and equity from $90,000rnto $40,000.</p

The most interesting household wealth v home equity figures,rnhowever are in the age cohorts.  Olderrnhouseholds lost dramatically less equity than did younger households.  The largest loss was among households in thern35 to 44 age range where the median home equity fell 45.45 percent.  Those less than 35 years of age saw equityrndrop 31.5 percent.  The other two pre-retirementrncohorts – 45-54 years and 55-64 years were down 27.7 percent and 20.0 percentrnrespectively.  Then there was arnprecipitous drop to a median loss of equity in the over 65 age group with thernthree age groups within this category losing a median of 3.6 percent.   </p

This of course makes sense as older households had much morernequity to begin with so the rapid home price depreciation did not affect themrnas severely on a percentage basis.  It isrnharder to understand why they also were not as hard hit in the actual dollarsrnlost.  Those over 65 years of age had arnmedian loss $5,000 while those in the younger age groups saw their equity erodernby double digits.  </p

Whatever the reason, the stability of their home’s value wasrnreflected in the household wealth of older Americans.  The net worth of younger groups was down fromrn17 percent to 55 percent while the older households had a median decrease ofrn4.16 percent.  One of the older agerngroups – 65 to 69 – had an actual increase of 2.36 percent although that wasrnoffset by a near 10 percent decrease in the net worth of those 70 to 74 yearsrnan age group that seemed to have suffered disproportionately from decreases inrnIRA and 401(k) assets.</p

Change in Equity andrnNet Worth – 2005-2010</p<table border="1" cellpadding="2" cellspacing="0"<tbody<tr<td valign="top" width="115"

Age Group</p</td<td valign="top" width="96"

NW Change $</p</td<td valign="top" width="105"

NW Change %</p</td<td valign="top" width="120"

Equity Change $</p</td<td valign="top" width="114"

Equity Change %</p</td</tr<tr<td valign="top" width="115"

Under 35</p</td<td valign="top" width="96"

$ rn 2,326</p</td<td valign="top" width="105"

30.10</p</td<td valign="top" width="120"

$ 23,000</p</td<td valign="top" width="114"

31.5</p</td</tr<tr<td valign="top" width="115"

35 – 44</p</td<td valign="top" width="96"

39,770</p</td<td valign="top" width="105"

54.50</p</td<td valign="top" width="120"

35,000</p</td<td valign="top" width="114"

45.45</p</td</tr<tr<td valign="top" width="115"

45 – 54</p</td<td valign="top" width="96"

41,254</p</td<td valign="top" width="105"

31.33</p</td<td valign="top" width="120"

30,500</p</td<td valign="top" width="114"

27.72</p</td</tr<tr<td valign="top" width="115"

55 – 64</p</td<td valign="top" width="96"

31,052</p</td<td valign="top" width="105"

17.21</p</td<td valign="top" width="120"

25,000</p</td<td valign="top" width="114"

20.0</p</td</tr<tr<td valign="top" width="115"

65 + </p</td<td valign="top" width="96"

7,392</p</td<td valign="top" width="105"

4.16</p</td<td valign="top" width="120"

5,000</p</td<td valign="top" width="114"

3.6</p</td</tr</tbody

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