Census: Drop in Net Worth Echoes Home Equity Loss

New comparative tables from the 2010 Census underline both
the importance of homeownership to building wealth
and the havoc wrecked by the
recession on that wealth
.       The Census
Bureau released detailed data on the type and value of assets owned by U.S. households
in 2005, 2009, and 2010.  We are
presenting a summary of the 2005 and 2010 figures based on actual numbers not
adjusted to 2010 dollars.  All numbers
represent U.S. medians.

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

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

It is important in analyzing the figures to recognize that
not all respondents owned a home or any of the other assets included in the
survey.  The differences in numbers reflect
changes in the population of those who do have such assets.

There were marked differences in how households fared over
the five years by race and age.  White
non-Hispanic households saw their net worth drop from $130,350 to $110,729 and
the equity in their home from $100,000 to $84,000.  Black and Hispanic households lost more than
half of their net worth with Black wealth dropping from $11,013 to $4,955 and equity
falling $70,000 to $50,000.  Hispanic
households went from a net worth of $17,078 to $7,424 and equity from $90,000
to $40,000.

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

This of course makes sense as older households had much more
equity to begin with so the rapid home price depreciation did not affect them
as severely on a percentage basis.  It is
harder to understand why they also were not as hard hit in the actual dollars
lost.  Those over 65 years of age had a
median loss $5,000 while those in the younger age groups saw their equity erode
by double digits.  

Whatever the reason, the stability of their home’s value was
reflected in the household wealth of older Americans.  The net worth of younger groups was down from
17 percent to 55 percent while the older households had a median decrease of
4.16 percent.  One of the older age
groups – 65 to 69 – had an actual increase of 2.36 percent although that was
offset by a near 10 percent decrease in the net worth of those 70 to 74 years
an age group that seemed to have suffered disproportionately from decreases in
IRA and 401(k) assets.

Change in Equity and
Net Worth – 2005-2010

Age Group

NW Change $

NW Change %

Equity Change $

Equity Change %

Under 35


2,326

30.10

$ 23,000

31.5

35 – 44

39,770

54.50

35,000

45.45

45 – 54

41,254

31.33

30,500

27.72

55 – 64

31,052

17.21

25,000

20.0

65 +

7,392

4.16

5,000

3.6

…(read more)

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