|by Dan McCue|
Last week, the Federal Reserve released its 2013 Survey of Consumer Finances, a triennial survey which gives a rare, detailed look at the assets and debts as well as incomes of households across the nation. In the months to come, the Joint Center will delve into these data to assess the financial status of households with a particular emphasis on the association between homeownership and household wealth and the implications of consumer debt for future trends in the housing market. But in the meantime, the following are some early findings on household wealth pulled from a quick look at the Federal Reserve’s summary of net worth by various household characteristics.
Low-Income Households Lost Wealth, While High-Income Households Held Their Ground Between 2010 and 2013, low-income households had substantial declines in real net worth, while higher income households reported modest gains. The greatest declines were felt by households in the bottom income quintile, where the average net worth dropped by 21 percent. Meanwhile, the average net wealth for the top 10 percent income group increased by 2 percent.
The Typical Renter Still Has Very Little Net Wealth
Median net worth for all renters remained unchanged in 2013 relative to 2010, at just $5,400. This is just a fraction of the median net worth of the typical homeowner, of $195,400, which increased by 4 percent in 2010-13. In fact, the real increase in median net wealth of owners alone between 2010 and 2013 ($8,400) exceeded the total median net wealth of renters in 2013 by over 55 percent.
The White/Minority Wealth Gap Expanded
The net worth of the typical white household increased by 2 percent over the past three years, while that of the typical minority household (non-white or Hispanic) dropped fully 17 percent. This extended the gap in median net wealth between the two groups ($142,000 vs. $18,100).
It Helps to Have a College Education
Looking at the changes in wealth by education level, we see that the median net worth for a household headed by a person with a college degree increased 5 percent in 2010-13. Meanwhile, the median net wealth of those with only a high school diploma or just some college fell by 14 percent.
Overall, Households Have Lowered Debt Costs
Median debt, including mortgages and all forms of consumer debt, declined 20 percent between 2010 and 2013. Fewer families have high debt payment to income ratios (above 40%) than at any time since 2001.
Fewer Families Held Home Mortgages, and the Average Mortgage Level Declined
Exceeding the decline in homeownership rates during the period, the share of owners with mortgages declined from 47.0 percent in 2010 to 42.9 percent in 2013. Furthermore, the average amount of mortgage debt also dropped by 5 percent.
Higher Shares of Young Households have Student Loan Debt and the Typical Level of Student Debt Held is Rising
The share of households with student loan debt rose again in 2013 to reach an even 20.0% of all households. Over a longer span of time, the increase in share has been significant – particularly for the young. For those under age 40, the share with student loan debt is up from 22.4% in 2001 to 38.8% in 2013. During that same time period, the average level of student debt held by younger households also grew from $16,900 in 2001 to $29,800 in 2013 – while the median amount that the typical young household owed rose from $10,500 to $16,800.
All told, the portrait that emerges from these data point to a continued widening of the wealth divide in the country by income, race/ethnicity, and education. And while there has been some improvement in the overall consumer debt load, the sharp rise in student loans is a real cause for concern for the ability of young adults to be able to afford to buy homes in the future. Stay tuned for further analysis of this rich data source.