Wednesday, April 2, 2014

Home Sweet Homewnership

Recent research from the Federal Reserve has revealed a deep gulf in the wealth of Americans by age. The average family headed by someone under age 40 has recovered only about a third of the wealth it lost during the recession, while that of older families has recovered pretty much in full.

The Fed has identified the key reason for this: the housing crisis. So many younger families were caught up in the wave of foreclosures that the homeownership rate for this cohort has fallen dramatically. In 2005, 50.1 percent of young families owned homes, but that number dropped to 42.2 percent in 2013.

Since so much of our wealth is contained in our homes, the differences among the age groups have become staggering. The average real wealth of a family headed by someone under 40 was just $108,000 at the end of 2013, according to the Fed; for families headed by someone aged 40 to 61, that same figure was $691,000.

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