Thursday, June 11, 2009

Fed: Household Net Worth Off $14 Trillion

by Bill McBride on 6/11/2009 12:00:00 PM

The Fed released the Q1 2009 Flow of Funds report today: Flow of Funds.

According the Fed, household net worth is now off $14 Trillion from the peak in 2007.

Household Net Worth as Percent of GDP Click on graph for larger image in new window.

This is the Households and Nonprofit Net Worth as a percent of GDP.

This includes real estate and financial assets (stocks, bonds, pension reserves, deposits, etc) net of liabilities (mostly mortgages). Note that this does NOT include public debt obligations.

This ratio was relatively stable for almost 50 years, and then ... bubbles!

Household percent equity was at an all time low of 41.4%.

Household Percent Equity

For blocked image users: Household Percent Equity

This graph shows homeowner percent equity since 1952.

When prices were increasing dramatically, the percent homeowner equity was declining because homeowners were extracting equity from their homes. Now, with prices falling, the percent homeowner equity is Cliff Diving!

Note: approximately 31% of households do not have a mortgage. So the 50+ million households with mortgages have far less than 41.4% equity.

Household Real Estate Assets Percent GDP For blocked image users: Household Real Estate Assets Percent GDP

The third graph shows household real estate assets and mortgage debt as a percent of GDP. Household assets as a percent of GDP is now declining rapidly. Mortgage debt declined, but increased slightly as a percent of GDP in Q1.

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