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Home | News | Government | Household Net Worth Plummeted After 2005, Alongside Income
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Household Net Worth Plummeted After 2005, Alongside Income

The middle class seemed to take another drubbing Monday with news that U.S. median household net worth fell 35 percent between 2005 and 2010. Excluding home equity, the Census Bureau found that median household net worth ticked up by 8 percent during the financial crisis. Who got hit the hardest? Of the many age groups, heads of households from 35 to 44 accounted for nearly 60 percent of the decline in net worth during the five-year period. But they weren't alone: Median net worth also declined for all age groups between 2005 and 2010.

The middle class seemed to take another drubbing Monday with news that U.S. median household net worth fell 35 percent between 2005 and 2010.

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Excluding home equity, the ""Census Bureau"":http://www.census.gov/ found that median household net worth ticked up by 8 percent during the financial crisis.

Who got hit the hardest? Of the many age groups, heads of households from 35 to 44 accounted for nearly 60 percent of the decline in net worth during the five-year period.

But they weren't alone. Median net worth also declined for all age groups between 2005 and 2010, with householders 65 years and older feeling the brunt of it, as theirs slid from $195,890 to $170,128.

Although heads of households under 35 saw their net worth fall from $8,528 to $5,402 â€" much less in real terms â€" percentages tell a different story: Younger homeowners saw their net worth decline by 37 percent, compared with older homeowners, whose net worth fell by only 13 percent.

Census Bureau economist Alfred Gottschalck said in a statement that the overall decline ""reflects drops in housing values and stock market indices.""

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Government data found that the declines also slammed educational groups across the board. Net worth plunged by 39 percent for those with only high school diplomas and 32 percent for those with bachelor's degrees.

Even so, the data correlated higher education with higher net worth, with median net worth at $245,763 for heads of households with graduate or professional degrees. Those with bachelor's degrees saw their median net worth hover at around $142,518.

The dismal news for householders seems to reflect a widening gap for those in the middle class. Last week the ""Federal Reserve"":http://www.federalreserve.gov/ released a ""survey"":http://www.federalreserve.gov/pubs/bulletin/2012/pdf/scf12.pdf of consumer finances that found similar results for householders between 35 and 44, whose median worth fell by 54.4 percent.

The survey also found that heads of households with more education saw their median income shrink between 2007 and 2010. Those with college degrees saw their pre-tax income dip from 81.9 percent to 73.8 percent, for example.

""Timothy Smeeding"":http://www.lafollette.wisc.edu/facultystaff/smeeding-timothy.html, director of the Institute for Research on Poverty at the ""University of Wisconsin at Madison"":http://www.wisc.edu/, tells us that housing and financial crises slammed emerging middle-class families with a one-two, sizably reducing their home equity and net worth.

""The major asset of the middle class is their home,"" he says. ""Their own home â€" and that got clobbered.""

The professor says that historically low interest rates allows someone with his background to refinance â€" he has done so twice in recent years â€" but that younger householders enter a down market without the equity needed to save money and build their net worth.

""We're living in an economy in decline,"" Smeeding adds. ""It's crawling back a little bit, but it's going time.""

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About Author: Ryan Schuette

Avatar of Ryan Schuette
Ryan Schuette is a journalist, cartoonist, and social entrepreneur with several years of experience in real-estate news, international reporting, and business management. He currently lives in the Washington, D.C., area, where he freelances for DS News and MReport.

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