The Impact of the Housing Crash on Family Wealth
AbstractThis paper extrapolates from data from the 2004 Survey of Consumer Finance to project household wealth, by wealth quintile, in 2009 under three alternative scenarios. The first scenario assumes that real house prices fall no further than their level as of March 2008. The second scenario assumes that real house prices fall an additional 10 percent as a 2009 average. The third scenario assumes that real house prices fall an additional 20 percent for a 2009 average. The projections show that the vast majority of families will see a substantial reduction in wealth by 2009 in any of these scenarios and that the cohorts just approaching retirement will have very little to support themselves in retirement other than their Social Security. The projections also show that a large number of families will have little or no equity in their homes in 2009.
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Bibliographic InfoPaper provided by Center for Economic and Policy Research (CEPR) in its series CEPR Reports and Issue Briefs with number 2008-20.
Length: 15 pages
Date of creation: Jul 2008
Date of revision:
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housing bubble; home prices; household wealth;
Find related papers by JEL classification:
- R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
- L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services
- O51 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada
- E - Macroeconomics and Monetary Economics
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-11-18 (All new papers)
- NEP-MAC-2008-11-18 (Macroeconomics)
- NEP-URE-2008-11-18 (Urban & Real Estate Economics)
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- Cynthia A. Bansa & Martha A. Starr, 2011. "Distributional costs of the housing-price bust," Working Papers 2011-04, American University, Department of Economics.
- Davies, James B. & Yu, Xiaoyu, 2013. "Impacts of Cyclical Downturns on the Third Pillar of the RIS and Policy Responses," CLSSRN working papers clsrn_admin-2013-20, Vancouver School of Economics, revised 29 Apr 2013.
- Dean Baker, 2010. "The Budget Deficit Scare Story and the Great Recession," CEPR Reports and Issue Briefs 2010-04, Center for Economic and Policy Research (CEPR).
- J. Michael Collins & John Karl Scholz & Ananth Seshadri, 2013. "The Assets and Liabilities of Cohorts: The Antecedents of Retirement Security," Working Papers wp296, University of Michigan, Michigan Retirement Research Center.
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