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Housing Market Meltdown Will Cause Massive Losses in Household Wealth
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Center for Economic and Policy Research
July 10, 2008
As Senators McCain and Obama fine-tune their plans for Social Security in preparation for the 2008 presidential election, a new report from the Center for Economic and Policy Research (CEPR) shows that, due to the collapse of the housing bubble, the vast majority of Americans have accumulated little or no wealth. This means that they will be almost completely reliant on Social Security and Medicare to support them in their retirement years.
The study, “The Impact of the Housing Crash on Family Wealth,” analyzed the wealth holdings of families in all age cohorts in 2004 and projected the wealth of these families in 2009. The findings are presented by income quintile under three scenarios- real house prices remain at current levels, real house prices fall by an additional 10 percent, or real house prices fall by an additional 20 percent. In all three scenarios, the vast majority of these families will have little or no housing wealth in 2009.
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“This extraordinary destruction of wealth will have tremendous implications for millions of families,” said report co-author Dean Baker. “Coupled with a very low personal savings rate, this means that many people, especially those near retirement will only have Social Security and Medicare to rely on once they leave the workforce.”
The report projects that if house prices stay the same through 2009, the median household headed by a person between the ages of 45 and 54, those in their prime earning years, will have 24.7 percent less wealth than did the median household in this age group in 2004. These households will have accumulated just $113,268 in net worth in 2009, barely $15,000 more than their counterparts in 1989, whose net worth totaled $97,600.
If real house prices fall 10 percent, the median household in the 45 to 54 cohort will see a 34.6 percent loss in wealth compared with the median in 2004 while families in the 18 to 34 cohort will lose of 67.6 percent. If prices fall by 20 percent, the most pessimistic scenario, families in the 55-64 cohort will experience a loss of 49.6 percent of their wealth compared to the same cohort in 2004.
This analysis should also prompt serious re-examination of policy proposals to cut Social Security and Medicare for near retirees. Baker commented, “policies that perhaps could have been justified at the peak of the housing bubble make much less sense now that tens of millions of near-retirees have just seen most of their wealth disappear.”
In analyzing wealth holdings for these families, the authors used data from the Federal Reserve Board’s 2004 Survey of Consumer Finance. The authors also used the S&P 500 and the Case-Shiller 20-City Composite Index to adjust for equity values and home price changes between 2004 and 2009.
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July 10th, 2008 at 12:29 pm
This is a real concern for most Americans. We are really going to be fighting for our lives in ten years from now if we don’t start being smart and planning now. We already know that the Fed. Reserve can manipulate the very value of our dollar, and thus the value of our savings. So we must be smart about spreading our portfolio to include metals as well as other assets.
Bottom line is, in order to do that, you have to be making money now. And in an economy like the one we have now, that is not easy to do. I have been lucky. I stumbled onto something that has allowed me to make some great money now that is putting me ahead for later. I am stocking up on food and other items to prepare for the coming storm.
If you’re interested in seeing a good option to make some extra cash, click on my name above. I started doing this about a year ago and it is really paying off. Either way, I wish all of my fellow truth seekers the best of luck… we’re gonna need it!!!
July 10th, 2008 at 12:36 pm
#1 how about you just buy some ad space from infowars instead of polluting the comments section
July 10th, 2008 at 12:42 pm
this is a weapon against the american people,it is no less than an secret sanction that has been imposed upon us by the UNITED NATIONS,they wish to devalue the dollar to send america into the third world,then they will offer a solution to america in exchange for our soveriegnty,we will be ushered into the NORTH AMERICAN UNION with out consensous from the american people,our nations polititions are already working secretly on this agenda,(Bilderberger meeting),our culture and heritage are at stake,our NATION as we know it is at stake.
July 10th, 2008 at 12:56 pm
Just goes to show you. The only thing we have learned from history is that we never learn from history.
The same damned thing happened to everyone back in the 30’s.
When will we learn that the only answer to this problem is real money.
The FED must be removed and usury must be outlawed.
Otherwise we will see this again and again and again.
July 10th, 2008 at 1:14 pm
Check out http://www.documentarywire.com to watch 100’s of documentaries for free!!
FREE BEER! (is something you will not find)
July 10th, 2008 at 1:28 pm
Who owns the houses when they are foreclosed?
The banks. Are they going to sit on all those millions of houses and pay the taxes on them? No!
With the collapsing dollar and the falling real estate prices, the banks are going to sell them to who has the money.
Who has the money? The Chinese, the Japanese and everyone else.
America will be bought up, settled and in the end conquered without a single shot being fired.
It will be just like what the Japanese did to Hawaii in the ’80’s.
The settlers will become American citizens and start voting their own politicians into office and end up running this country.
July 10th, 2008 at 1:31 pm
Help me Sign this ANTI – Fluoride petition
I am a 27 yr.old wife an mother of 5 beautiful children,whom I adore and want to keep healthy an safe from all harm.Seeing that fluoride is in our water it is hard to do that.I am here trying to inform others about fluoride and the extremely harmful effects of this product. I was sickened to learn all the crap that it causes,such as holes in the brain,thats right it eats away your brain,along with so much more.You can see for yourself at Fluoridealert.org/..You will be alarmed at all the effects it has on us,but yet why do they put it in our water??Good question I have my own beliefs on this.Please join me to stop this madness.It will take all of us to stop it…
http://www.thepetitionsite.com.....ide2gether
July 10th, 2008 at 1:32 pm
Debt for debt, that is all Federal Reserve NOTES are, a pormise to pay in the future. Gee, why do people pay off a motrage and still not OWN the property (property meaning the land the house sits on)? Well, Mr. US Citizen all that work you did to earn “money” and “pay” off that debt, guess what, the jokes on YOU, you never paid anything!! Ha Ha, we fooled you!!
You promised to pay it at some future date, you did not give the Mortage Co anything of real value, so guess what? You can keep the house, but the LAND it is on is property of the corporation of the US Treasury, who owes the Federal reserve trillions of dollars in goods and services. So, your land, your work and your energy is held in trust and liened by the Federal Reserve.
“Federal Reserve notes represent a first lien on all the assets of the Federal Reserve Banks, and on the collateral specifically held against them.
Federal Reserve notes are not redeemable in gold, silver or any other commodity, and receive no backing by anything This has been the case since 1933. The notes have no value for themselves, but for what they will buy. In another sense, because they are legal tender, Federal Reserve notes are “backed” by all the goods and services in the economy.”
http://www.treas.gov/education.....nder.shtml
Check it for yourself, debt slaves.
“This statute means that all United States money as identified above are a valid and legal offer of payment for debts when tendered to a creditor.”
Note the wording “a valid and legal offer of payment for debts when tendered to a creditor.”
Federal reserve NOTES are a legal offer of payment, they are not “a payment” of debts. Since they are NOT lawful, constitutionally defined Dollar, they are NOTHING but an offer of payment of debt.
class dismissed.
July 10th, 2008 at 1:40 pm
In the UK your starting to see for sale signs everywhere but i think people have left it too late……after all……who is going to buy a house that they know is going to continue to depreciate
July 10th, 2008 at 3:00 pm
Please join me in a moment of silence in remembrance….For Common Sense had served us all so well for so many generations.
Obituary …..Common Sense
Today we mourn the passing of a beloved old friend, Common Sense, who has been with us for many years. No one knows for sure how old he was since his birth records were long ago lost in bureaucratic red tape.
He will be remembered as having cultivated such valuable lessons as knowing when to come in out of the rain, why the early bird gets the worm, life isn’t always fair, and maybe it was my fault.
Common Sense lived by simple, sound financial policies (don’t spend more than you earn) and reliable parenting strategies (adults, not children are in charge).
His health began to deteriorate rapidly when well intentioned but overbearing regulations were set in place. Reports of a six-year-old boy charged with sexual harassment for kissing a classmate; teens suspended from school for using mouthwash after lunch; and a teacher fired for reprimanding an unruly student, only worsened his condition.
Common Sense lost ground when parents attacked teachers for doing the job they themselves failed to do in disciplining their unruly children. It declined even further when schools were required to get parental consent to administer Aspirin, sun lotion or a sticky plaster to a student; but could not inform the parents when a student became pregnant and wanted to have an abortion.
Common Sense lost the will to live as the Ten Commandments became contraband; churches became businesses; and criminals received better treatment than their victims. Common Sense took a beating when you couldn’t legally defend yourself from a burglar in your own home and the burglar can sue you for assault.
Common Sense finally gave up the will to live, after a woman failed to realize that a steaming cup of coffee was hot. She spilled a little in her lap, and was promptly awarded a huge settlement.
Common Sense was preceded in death by his parents, Truth and Trust; his wife, Discretion; his daughter, Responsibility; and his son, Reason. He is survived by three stepbrothers; I Know my Rights, Someone Else is to Blame, and I’m a Victim.
Not many attended his funeral because so few realized he was gone. If you still remember him pass this on. If not, join the majority and do nothing.
Author unknown