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