Arnold
CibbuanoThe Household balance sheet
February 19th 2009 07:26
With the increasingly desperate news from the economic thinktanks, the average homeowner is starting to feel like perhaps things weren't all sewn up, like the government said in the first place.
In fact, Baseline Scenario has a depressing summary of the current status of the global economy, sounding less like a report, and more like the opening sequence to a apocalyptic science fiction movie, where mutants run amok in the desert, and former Manhattan bankers have learned how to farm splongoberries in growtanks.
Even more depressing is the household balance sheet that they've published this week, showing how the inflated housing prices have really put a squeeze on American families.
The thing to do is to look at the net wealth of American homes, and Baseline Scenario notes that the median income fell in 2007, while net worth grew around 20%, due to inflated housing values.
These economists estimate that, now, with the subprime crisis, that net worth has fallen to between $90-$95k, levels that we haven't seen since 1991.
While many analysts would say that this is just cyclical, and these occasional crashes are normal, I would say: what's the point? For us to have had unrealistic ideas about what our homes were worth, only for the actual value to be less than that of 10 years ago? Is this progress?
The post also suggests that families have taken on $5 000 more debt, mostly from mortgages and loans, which doesn't seem like much, but could be enough to push families into desperate straits.
"From 2004 to 2007, the typical family only took on $4,900 more debt - mainly in mortgages, but some for installment loans (primarily for cars and education) - but its assets grew by slightly more, a little bit because of home values but more because of increased retirement savings, presumably due to the rise in the stock market."
*this image is from Let's talk real estate
| 83 |
| Vote |
subscribe to this blog
Advertise your property for sale/rent for Free on ZRealEstate.
View Properties : NSW | VIC | QLD | SA | WA | ACT | TAS | NT
Advertise your Properties : NSW | VIC | QLD | SA | WA | ACT | TAS | NT
Advertise your Properties : NSW | VIC | QLD | SA | WA | ACT | TAS | NT
