The vaporization of wealth in America

I’ve spoken before on this blog about how Americans have been watching their single biggest asset wash away before their eyes like a sandcastle on the beach as their home depreciate. We all know what a serious problem that is, but not all of us know what it means in dollars and sense. A new report solves that problem.

I saw the news on CNN’s website under the headline: Household wealth down 23% in 2 years - Fed. In the story, reporter Charles Riley describes how the average American family lost 23% of it net worth between 2007 and 2009, according to a study by the Federal Reserve.

In dollars and sense, the average family’s net worth in 2007 was $125,000. By 2009, it had fallen to $96,000. It’s should come as no surprise that these numbers are very close to the amount of equity the average family had in their homes, in both years. Most people’s wealth is tied up in their homes. It’s the only real asset that most people have in this country. The value of primary real estate holdings, according to the report, fell by an average of $18,700.

That’s not to say that some average families don’t have stock portfolios. According to the survey, those that did own stock found the value, on average, to fall more than a third, from $18,500 to $12,000 over the same period.

But depreciating assets weren’t the only plagues visiting our countrymen during this time period. The survey shows that the average family took on an additional $5,000 in debt and saw the median household annual income fall $300.

Since 2009, things have gotten much worse for homeowners here. But not for banks. I’ll talk about that in my next post.