Gen X Rebounds As The Only Generation To Recover The Wealth Lost After The Housing Crash

Dated: 08/06/2018

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Gen X households are the only ones to recover the wealth lost in the Great Recession

Few American homeowners were spared from the broad housing collapse a decade ago, but Generation Xers were hit particularly hard. Newer to the housing market, more likely to be buying at peak prices and taking on more mortgage debt to buy their homes, they lost more wealth than other generations. But a new Pew Research Center analysis of Federal Reserve data finds that Gen Xers are the only generation of households to recover the wealth they lost during the Great Recession.

Wealth tends to rise most rapidly at younger ages before peaking once people reach their early 70s. The more robust wealth recovery of Gen Xers compared with the older Boomer and Silent generations fits this pattern. Wealth, or net worth – the difference between the value of a household’s assets and debts – is an important dimension of household well-being because it is a measure of a family’s “nest egg,” resources that can sustain members through job layoffs or emergencies as well as provide income during retirement.

For many American households the bulk of their wealth is in their home, and this was especially the case for households headed by Gen Xers (then ages 27 to 42) in 2007. About half of the assets they owned were in the value of their primary residence, whereas households headed by a member of the Baby Boom or Silent generation had a higher share of their money in financial assets such as checking or retirement accounts.

Gen X’s economic hard times

The median The generations definednet worth of Gen X households had declined 38% from 2007 ($63,400) to 2010 ($39,200), while the typical wealth loss for Boomer and Silent households was not as steep (26% and 14%, respectively). Millennials, who were beginning to form households and accumulate wealth (the oldest was only 26 in 2007), were hit hard by the Great Recession in terms of employment and earnings, but not in terms of wealth destruction, as they had little wealth to lose. (The Great Recession began in December 2007 and ended in June 2009. )

During the downturn, Gen X homeowners experienced the largest decline in home equity, the difference between what the primary residence is worth and all the debts secured by the home. The median home equity of Gen X homeowners fell 43% from 2007 ($66,000) to 2010 ($37,600). Boomer and Silent homeowners had smaller declines in median home equity (28% and 15%, respectively).

Stock prices also plunged after 2007, and most households (Millennials being the exception) had declines in financial holdings. The median value of the financial assets owned by Gen X households fell 20% from 2007 to 2010. Typical Boomer and Silent households had modestly larger declines in their financial assets.

Bouncing back click to continue article  


#nextgen #genx #realestatenews #economic #housing #market 

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