Rising Stock Market, Housing Recovery Bring U.S. Household Net Worth Above Pre-Recession Level

by: Mark J. Perry

The Federal Reserve released data today for the net worth of U.S. households in Q4 2012 (see B.100 Balance Sheet of Households and Nonprofit Organizations). Below are some highlights.

Click to enlarge

Click to enlarge

1. The net worth of U.S. households increased to $66.1 trillion in the fourth quarter last year, which was an increase of $5.5 trillion, and 9%, from the same quarter in 2011 (see top chart above).

2. Household net worth in Q4 last year of $66.1 trillion was the highest level in any quarter since Q3 2007 before the recession, when household net worth was at an all-time high of $67.3 trillion (see top chart above).

3. As a result of rising home prices last year (7.9% according to CoreLogic's repeat-sales home price index), the value of real estate owned by U.S. households increased by $1.4 trillion during 2012 to $17.65 trillion in the fourth quarter, up from $16.24 trillion at the end of 2011. Household real estate values are now at their highest level since 2007 (see second chart above). With about 78 million U.S. households owning homes, the $1.4 trillion in real estate appreciation last year would translate into an average gain of more than $19,000 per household in home value.

4. The value of equities and mutual funds owned by U.S. households increased almost $3 trillion last year and by more than 14%, from $13.2 trillion at the end of 2001 to $15.1 trillion in Q4 last year.

5. The total value of all financial assets owned by U.S. households increased by $3.8 trillion last year, from $50.6 trillion in Q4 2011 to $54.4 trillion in Q4 2012.

In nominal terms, U.S. households last year gained back nearly all of the $16 trillion of net worth that they lost during the Great Recession, financial crisis, and collapse of housing values in 2008 and 2009. With further gains so far this year in stock prices (the S&P is up year to date by 8.3%) and home prices (the CoreLogic home price index was up 9.7% in January and its pending home price index predicts another 9.7% gain in February home prices), it's now pretty certain that U.S. household net worth has surpassed the pre-recession peak of $67.3 trillion in Q3 2007 (see related AP story here) and reached a new all-time high.