Housing Slump To Destroy Household Wealth

Since prices started to drop in mid-2006, each U.S. homeowner has lost $50,000 in real housing wealth; and, even if the market proves to have already bottomed out, the collapse has “eliminated most, if not all, of the gains that families had made in accumulating wealth over the last two decades."

(Observer) -- Even if housing prices stop plummeting and the worst of the crash is now behind us, it has left an “extraordinary destruction of wealth” in its wake, sending the median net worth of American households plummeting across the board next year, according to a study released today (PDF) by the Center for Economic and Policy Research.

The vast majority of American households will emerge from the housing slump with “little or no housing wealth” in 2009 under even the most optimistic scenarios, according to the report.

If house prices stay the same through 2009, the median household headed by a person between the ages of 45 and 54 in 2009--their prime earning years--will have 24.7 percent less wealth than the group median in 2004. As of 2009, these households will have accumulated just $113,268 in net worth--barely $15,000 more than the $97,600 total of their 1989 counterparts.