The Federal Reserve's Survey of Consumer Finances,

conducted once every three years, provides snapshots of family income

and net worth along with basic demographic details and more detailed

information on how families store wealth they have. The most recent

survey, concluded in 2007, offers a picture of the situation before

home price declines and the tumbling equities market hit household

balance sheets. At that time, median homeowners had well over $200,000

in net worth compared to median renters who had just over $5,000. In

the research paper accompanying the survey results,

Fed researchers conducted a thought experiment to determine how market

declines might have impacted the mean and median households through

October 2008. Looking at aggregate data, the National Association of

Realtors® estimated the impact for renter and homeowner households

through calendar year 2008. The result, shown below in Chart 1,

suggests that despite declines in equity and housing markets,

homeowners still have a net worth orders of magnitude greater than

renters in 2008.

Chart 1

Homeowners store wealth in a variety of places, but chief among the

options is their primary residence. How has the wealth of current

homeowners changed as a result of home ownership? One way to answer

that question is to create a snapshot of the equity individuals who

purchased a home at the median price 5, 10, 15, and 20 years ago would

have built up if they had kept that home through 2008. This is the

second year we have performed this experiment for more than 150

metropolitan statistical areas (MSAs), and the findings yield some

expected and unexpected results.

The top five performers over the period from 1987 to 2007 were all

out west, in California and Hawaii, and the amount of equity those home

owners accumulated was between $490,000 and almost $690,000 (see Table

1[2007]). For 2008, the top three performers over 1988 to 2008 were the

same albeit in a slightly different order (see Table 1[2008]). New York

areas rounded out the rest of the top 6. The 20-year gains in 2008 were

on the order of $318,500 to $485,300. While these gains are $150,000

-$250,000 less than last year's estimated gains, they are still sizable.

Table 1 [2007]

    

Location

5 year

10 year

15 year

20 year

 San Francisco-Oakland-Fremont,  CA

 $  322,171

 $  557,835

 $  605,668

 $  689,298

 Anaheim-Santa Ana,  CA

 $  313,933

 $  500,821

 $  521,743

 $  591,085

 Honolulu,  HI

 $  330,443

 $  377,942

 $  374,674

 $  521,288

 San Diego-Carlsbad-San Marcos,  CA

 $  248,356

 $  428,500

 $  447,663

 $  503,809

 Los Angeles-Long Beach-Santa Ana,  CA

 $  318,196

 $  436,526

 $  426,826

 $  493,509

Data from: NAR/FHFA /Haver 2007

   

 

Table 1 [2008]

    

Location

5 year

10 year

15 year

20 year

 Honolulu,  HI

$  271,865

$ 370,788

$ 357,672

$ 485,255

San Francisco-Oakland-Fremont, CA

$  104,825

$ 347,730

$ 433,008

$ 481,339

Anaheim-Santa Ana, CA

$  81,911

$ 310,084

$ 371,843

$ 403,106

New York-Wayne-White Plains, NY-NJ

$  134,400

$ 314,006

$ 354,676

$ 359,617

Nassau-Suffolk, NY

$  97,629

$ 285,860

$ 317,131

$ 321,170

NY-N New Jersey-Long Island, NY-NJ-PA

$  119,189

$ 280,969

$ 311,951

$ 318,490

Data from: NAR/FHFA /Haver 2008

    

 

Table 2 [2007] - Recently declining markets have still enabled equity building over longer time horizons

 

Location

5year

10year

15year

20year

 Detroit-Warren-Livonia,  MI

$(15,788)*

$36,845

$77,677

$98,298

 Youngstown-Warren-Boardman,  OH-PA

$1,306

$14,976

$34,532

$48,281

 Toledo,  OH

$4,179

$31,085

$51,525

$69,608

 South Bend-Mishawaka,  IN

$5,661

$23,143

$42,250

$60,870

 Ft. Wayne,  IN

$8,416

$22,882

$41,875

$54,653

 Canton-Massillon,  OH

$8,440

$28,730

$55,533

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