Showing posts with label household. Show all posts
Showing posts with label household. Show all posts
Thursday, March 6, 2014
Household Net Worth Recovered 1 17 Billion in 4Q 2012
Household net worth continued its recovery in the fourth quarter, gaining $1.17 billion. Household net worth has been revering steadily since the beginning of 2009 and is now approaching its pre-crisis peak. The fourth quarter’s household net worth is just $1.3 billion short of its 3Q 2007 peak of $64.4 billion. Household net worth rose 9% over 2012.
The improvement was driven primarily by a near $800 billion increase in the value of financial assets that occurred despite stock market declines. The Dow Jones Industrial Average fell 2.5% over the quarter. The increase in the value of financial assets shows households’ increasing willingness to invest, as household holdings of equities surged. The Dow has now surged 9.1% so far in 2013, indicating that improvement in household net worth will likely improve.
Home equity also improved as the housing recovery continued, with net worth receiving a $500 billion increase due to real estate wealth. Home equity as a percentage of household real estate rose to 46.6%, its highest level since the first quarter of 2008.
Liabilities also rose for the household sector as families become willing to take on more debt. Total liabilities rose by about $133 billion, as household debt grew at an annual rate of 2.4% in the fourth quarter.
Read the Federal Reserves Z.1 release.
ReadThe RestEntry..
The improvement was driven primarily by a near $800 billion increase in the value of financial assets that occurred despite stock market declines. The Dow Jones Industrial Average fell 2.5% over the quarter. The increase in the value of financial assets shows households’ increasing willingness to invest, as household holdings of equities surged. The Dow has now surged 9.1% so far in 2013, indicating that improvement in household net worth will likely improve.
Home equity also improved as the housing recovery continued, with net worth receiving a $500 billion increase due to real estate wealth. Home equity as a percentage of household real estate rose to 46.6%, its highest level since the first quarter of 2008.
Liabilities also rose for the household sector as families become willing to take on more debt. Total liabilities rose by about $133 billion, as household debt grew at an annual rate of 2.4% in the fourth quarter.
Read the Federal Reserves Z.1 release.
Sunday, March 2, 2014
Slow Pace of Household Formation Adversely Impacted the Housing Market
Recent research by the Federal Reserve Bank of Cleveland noted that the United States had a sharp slowdown in the pace of household formation from 2007 through 2010 relative to trend. This slow rate of household formation adversely impacted the housing market, as lower household formation rates reduce housing demand.
From 1997 to 2007, about 1.5 million households were formed on average each year in the United States. When the Great Recession hit, household formation averaged about 500,000 per year for the next three years.
As a result, there were 2.5 million fewer households formed between 2007 and 2010 with almost three-quarters of the deficit attributed to young adults (ages 18 - 34).
The study concludes that "the sharp decline in home ownership rates for the younger cohort shows little sign of recovering, suggesting that when young adults start forming more households, it may have a stronger impact on the demand for rental properties than owner-occupied housing over the near term."
Read the report.
ReadThe RestEntry..
From 1997 to 2007, about 1.5 million households were formed on average each year in the United States. When the Great Recession hit, household formation averaged about 500,000 per year for the next three years.
As a result, there were 2.5 million fewer households formed between 2007 and 2010 with almost three-quarters of the deficit attributed to young adults (ages 18 - 34).
The study concludes that "the sharp decline in home ownership rates for the younger cohort shows little sign of recovering, suggesting that when young adults start forming more households, it may have a stronger impact on the demand for rental properties than owner-occupied housing over the near term."
Read the report.
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