Americans’ wealth hit an all-time high last summer, in part from the steady recovery of home prices. According to the Federal Reserves’ report, from July through September, the nation’s wealth rose 2.6% to $77.3 trillion.
We see that Americans’ net worth spiked based on two contributing factors: stock prices rising by $917 billion and home values rising by $428 billion. Overall, household wealth has been rising gradually since 2008. Household wealth, or net worth, is the total value of homes, stocks, bank accounts, and other assets, minus mortgages, credit cards, and other debts. Though this information stopped in September, we see stock prices and household wealth have continued to rise since then.
The Federal Reserves’ Report also noted that Americans are borrowing more money, indicating job security and confidence in our broader economy. Specifically, the total mortgage debt rose 0.9% from the previous quarter, the first increase since 2009. This rise reflects home sales increasing and fewer mortgage defaults.
Higher household wealth suggests a hot real estate market, as people have the financial capability and confidence to purchase homes.
With the start of 2014, we hope to see this trend continue to move upward with household wealth increasing.