Posted on 02/24/2006 12:42:16 PM PST by ex-Texan
Americans may feel richer because of soaring home prices, but they're not.
U.S. families' wealth stagnated during the economy's recession and recovery from 2001 through 2004, as lackluster wage growth, sagging stock prices and rising debt levels offset the gains from higher home values, the Federal Reserve reported Thursday in its latest Survey of Consumer Finances.
Home prices jumped nearly 27 percent during the survey period, and the share of households owning homes rose to 69.1 percent in 2004, the report said. That made Americans feel good. And it did help boost the total value of families' assets — such as homes, autos, stocks, bonds and other investments.
But wealth, or net worth, measures the value of a household's assets minus its debts — such as mortgages, car loans, student loans and credit-card balances. And debt climbed steadily during the survey period, as the Fed slashed interest rates to stimulate borrowing and spending in rocky economic times. After totaling up both sides of the ledger, the median net worth of American households rose just 1.5 percent over the three years measured, to $93,100, according to the Fed's report, which is compiled every three years to provide a portrait of family finances.
By comparison, median family wealth rose 10.3 percent in the previous survey period, from 1998 through 2001, and shot up 17.4 percent from 1995 to 1998, during an economic boom that pushed up stock prices and wages.
The only weaker gain in wealth recorded by the Fed was in its first such survey, in 1989-92, when median household net worth dropped 5.2 percent during a period that included the recession of 1990-91.
(Excerpt) Read more at seattletimes.nwsource.com ...
IBWD "In before we're doomed."
When I calculate net worth, I have a number that excludes real estate.
Your financial net worth, in financial assets, is what you should be following.
IBWD...D
I think I lot of people get screwed because they think of a home equity loan as taking money out of their house, instead of a loan with your house as collateral, which is what it is.
So during the period of 2001-2004 we had 9-11 and a recession and net worth still somehow managed to increase, this means the world is going to end? Geez, you see bubbles everywhere.
When the next depression hits the world, the arabs can drink their oil and burrow back under the dung pile from which we released them 75 years ago,
I think you did this a few days ago, that is, provide a link that rather than bolstering your point, goes to a web page with a couple hundred news stories,, none of which are in any discernable date or topic order.
Is there something specific on that site that you wish to point out? Otherwise it's just a disorganized mishmash of news links.
I have not seen a lot of commentary in the MSM nad the financial media on this point. I'd like to see what people think the impact of this may be. I personally am concerned that, perhaps not in the short term, but certainly in the longer term, could transfer a lot of power and wealth away from the US and towards Europe.
angkor hasn't created an about page
Why? So they trade in Euros...big deal.
How many hundreds of billions in mortgage bonds have been purchased by other nations?
Besides home prices falling 50%, 90% of loans going into default, solent green, and nuclear holocaust?
Not sure what over valued means. I have owned homes in Northern Va for 30 years and with the exception of one short two year period in in the early 80s have my homes ever decreased in value. Certainly there have been times when my homes did not increase in value. I started with a 5K downpayment on a townhouse in 1975 and I now own a home that was estimated to be worth 950K a month ago. An estimate based on other sales in of equal homes in the neighborhood. My mortgage is 200K so I think it is safe to say my net worth is at a minimum 700K not including my 401K etc. The value of a home is defined by what someone is willing to pay for it, so there is no absolute on what a home is worth except when you sign the sales documents.
Let's not forget,your monthly minimum credit card payments are going up as well.Just wait till the full impact of that starts to show and things are really going to get serious.You should cancel any credit card insurance as well because that kind of insurance can be bought in an airport for all the good it is.
Agree on Nothern Virginia. A mortgage insurance company did a risk assessment of No. VA for the last 35 years and found only one quarter where the median home price fell during that period. I can't speak for LA, Las Vegas and Arizona markets, but Fairfax county has a median househould income of $85K. Using a standard multiple of 5 that should place median home prices at $425 in normal market. I believe our median home prices are around $550K. The premium is justified since our economy (Gov't Based) is largely recession proof.
One of the biggest drags on the economy are bureaucrats illegally writing law. I checked our state constitution and it says that only legislators may write law. Yet our idiot politicians gave law-writing power to the damn bureaucrats. And I don't recall voting in a constitutional amendment that allows unelected, unaccountable bureaucrats to write law. If I want to be ruled by an unelected soviet socialist council, I'm sure communist China will oblige.
I looked through the latest bureaucratic code numbers for building, and the damn pencil-neck bureaucrats want $50 to check every smoke detector in order to give it the bureaucratic okey-dokey. That's BS.
Who are these people this article is talking about?
In this period, my debt has gone down as I paid off my car and continue paying off my mortgage, my carrying costs dropped by refinancing to lower my interest rate without drawing money out, and the value of my home has doubled.
Yes, I am much better off.
That's just it-- as long as people get their 'truth' from Washington Post dispatches, numbers aren't needed.
They take a fed study that shows net worth slightly up and incomes slightly down, and report wealth as "stagnant" and income as "falling". What they're not reporting is that the "falling" happened between '99 and 9/11.
home equity debt for many is the equivalent of shifting credit card debt from one card to another
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