Household Balance Sheets: 4Q19


The fourth quarter 2019 Financial Accounts of the United States, the Federal Reserve’s flow of funds data, show the aggregate values of households’ assets and liabilities in the nation. Households’ real estate assets totaled $29.3 trillion and liabilities totaled $10.6 trillion, making homeowners’ equity $18.7 trillion or 64% of total household real estate.

The data show a continuation of the decrease in the quarterly growth rate of the market value of real estate assets that began in the second quarter of 2019. In the latest quarter, households’ assets grew at about half of a percent (0.47%) while in the third quarter of 2019, assets grew at approximately 0.3%.

These reduced growth rates stand in contrast to those exhibited over the last seven years, which revealed 1- to 2 1/2 % quarterly rates. This deceleration reflects the housing slowdown that affected the market at the end of 2018 and the start of 2019, but that slowdown has now ended.

One source of mortgage financing for homeowners are home equity lines of credit (HELOCs) and home equity loans, which are derived from owners’ equity. They are adjustable-rate loans based on the prime rate, which closely follow the federal funds rate. Just yesterday, the Federal Reserve slashed the federal funds rate by 100 basis points to 0%, unseen since the 2008 financial crisis, in a bid to assist the ailing U.S. economy. As businesses, particularly those in the service sector, struggle amid the COVID-19 contagion, homeowners in their ranks may find HELOCs and home equity loans as attractive sources of financing.

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