- The net worth of households and non-profits has recovered completely from the recession and reached a new peak of over $70 trillion in the first quarter of 2013 according to data from the Federal Reserve Flow of Funds.
- During the recession, the net worth of households and non-profits—the sum total of tangible assets such as real estate and financial assets such as savings and equities minus liabilities such as mortgages and other debt—took a beating, declining by more than $15 trillion from the first quarter of 2007 to the first quarter of 2009.
- While a reduction of debt has led to some increase in net worth, the recovery of home and stock prices has had a much bigger effect. Household real estate accounts for $18 of the $83 trillion in household assets and owner’s equity in household real estate is $9 trillion of the $70 trillion in net worth.
- This data marks the 14th consecutive quarter of year over year growth in net worth and the 3rd consecutive quarter of nearly 10 percent gain from a year earlier.
- Households and non-profits are grouped together because current data collection by the Fed is not at a level of detail that would make separation of the two groups possible.
Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update highlights the unemployment rate.
- Between 2007 and 2011, there were almost 3 million more doubled-up households.
- According to David Johnson and the Census Bureau data, the number and share of doubled-up households and adults sharing households across the country increased over the course of the recession. The “doubled-up” households are defined as those that include at least one “additional” adult, a person age 18 or older who is not enrolled in school and is not the householder, spouse or cohabiting partner of the householder.
- In spring 2007, there were 19.7 million doubled-up households, amounting to 17.0 percent of all households. In the spring of 2011, the number of such households jumped to 21.8 million, or 18.3 percent. In total, 61.7 million adults, or 27.7 percent, were doubled-up in 2007, rising to 69.2 million, or 30.0 percent, in 2011.
- Young adults were especially hard-hit, with 5.9 million people ages 25 to 34 living in their parents’ household in 2011, up from 4.7 million before the recession. The remaining 14.2 percent of young adults lived in their parents’ households in March 2011, up more than two percentage points over the period.
- These young adults who lived with their parents had an official poverty rate of only 8.4 percent, since the income of their entire family is compared with the poverty threshold. If their poverty status were determined by their own income, 45.3 percent would have had income falling below the poverty threshold for a single person under age 65.
- This data is available from the Annual Social and Economic Supplement to Current Population Survey. For more information: http://www.census.gov/cps/.
The current home sales activity is matching levels seen 12 years ago, yet the total population has increased by more than 30 million since then. The rise in population does not always mean a proportional rise in housing demand if people double and triple-up. That is, there is no housing demand if additional roommates are acquired and young adults move back in with their parents. Still, a clear-cut mismatch is arising between home sales and population, and this mismatch cannot continue indefinitely. There is a limit to the number of roommates it is possible to have, and parents and kids will get on each other’s nerves at some point. Thus the mismatch can be viewed as a source of future housing demand.
One interesting aspect of the population increase is slower natural population growth. (Immigration numbers are not considered here.) Considering only U.S. domestic live births and domestic deaths, recent data points to one of the lowest paces of population growth on record. Only 130,000 people per month are being added to the country. A more normal pace would be something closer to 150,000. This slowdown also means a slower pace of future move-up buyers arising from changing family circumstances.
The Great Recession has been painful in many respects. Population growth has also been hit. Still, this only means that the big mismatch between home sales and population continues to widen further but at a slower rate. The pent-up housing demand continues to build.
Jobs and Income in 2011: Edging Up
There are some markets with fewer jobs this year compared to last, a situation which is not helping the local housing market despite very high affordability conditions. However, there are also many markets that added jobs on net over the past 12 months. In fact, in total there are 1.3 million more jobs in the country as measured by asking companies about their payroll count – which is known as payroll employment. By another measure, taken by asking households whether they are working or not, there are 360,000 more people working – which is known as household employment. However, even in the job-creating markets, consumers have been hesitant to make a major purchase like buying a car or a home. Nonetheless, continuing job additions in the aggregate should lead to higher home sales at some point.
Continue reading »