by Calculated Risk on 12/09/2022 12:24:00 PM

The Federal Reserve released the Q3 2022 Flow of Funds report today: Financial Accounts of the United States.

The net worth of households and nonprofits fell to $143.3 trillion during the third quarter of 2022. The value of directly and indirectly held corporate equities decreased $1.9 trillion and the value of real estate increased $0.8 trillion.
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Household debt increased 6.3 percent at an annual rate in the third quarter of 2022. Consumer credit grew at an annual rate of 7 percent, while mortgage debt (excluding charge-offs) grew at an annual rate of 6.6 percent.

Click on graph for larger image.

The first graph shows Households and Nonprofit net worth as a percent of GDP.  

Net worth as a percent of GDP is down $6.8 trillion from the all-time high in Q4 2021.

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.

The second graph shows homeowner percent equity since 1952.

Household percent equity (as measured by the Fed) collapsed when house prices fell sharply in 2007 and 2008.

In Q3 2022, household percent equity (of household real estate) was at 70.5% - unchanged from 70.5% in Q2, 2022. This is the highest percent equity since the early 1980s.

Note: This includes households with no mortgage debt.

The third graph shows household real estate assets and mortgage debt as a percent of GDP.  Note this graph was impacted by the sharp decline in Q2 2020 GDP.

Mortgage debt increased by $209 billion in Q3.

Mortgage debt is up $1.66 trillion from the peak during the housing bubble, but, as a percent of GDP is at 48.1% - unchanged from Q3 - and down from a peak of 73.3% of GDP during the housing bust.

The value of real estate, as a percent of GDP, decreased slightly in Q3, and is well above the average of the last 30 years.