Florida among states hardest hit by drop in net worth

The wealth of the median American family shrunk to 1992 levels as of 2010, according to a Federal Reserve report that singles out Florida as one of the states hit hardest by the Great Recession.

The Survey of Consumer Finance, released Monday, blamed a "broad collapse in housing prices" for the 38.8 percent drop in median net worth between 2007 and 2010.

"The amount of wealth destroyed by the housing crisis was trillions of dollars, and suddenly where there was a mound of wealth, consumers saw a crater," said University of Central Florida economist Sean Snaith. "It's one of the reasons I've been projecting the recovery to be as subdued as it has been."

The survey showed the median net worth of $126,400 in 2007 plummeted to $77,300 in 2010. Net worth is the value of assets like homes, bank accounts and stocks, minus debts like mortgages and credit cards.

Among families that owned homes, the Fed survey found that their median home equity declined from $95,300 in 2007 to $55,000 in 2010, a 42.3 percent drop.

"So much of your net worth is in the form of home equity and if you are in a county that had the steepest declines it would follow you would have greater declines in wealth than the average person," said Stan Geberer, a senior associate with the Orlando-based consulting firm Fishkind & Associates. "It's highly likely that many people in Florida were hit harder than average."

While home prices have inched upward in recent months in Palm Beach, Broward and Miami-Dade counties, they are still down 50 percent from their December 2006 peak, according to the most recent Standard & Poor's/Case-Shiller index.

Geberer said one positive economic sign in Monday's report is that costly credit card balances are down, meaning people are paying off bad debt. The proportion of families carrying a credit card balance fell to 39.4 percent in 2010, a drop of 6.7 percentage points from 2007.

The median credit card balance also fell, dropping from $3,100 in 2007 to $2,600 in 2010.

Because the survey only contains information through 2010, it doesn't reflect more recent gains in the stock market, Snaith said. A separate survey the Fed released last week showed that total family net worth climbed 4.7 percent in the first quarter of the year to $62.9 trillion, about 28 percent above its recession low. The increase was fueled by stock market gains.

Those gains put net worth about 5 percent below its pre-recession peak of $66 trillion.

Those gains can be especially important to South Florida's economy where retirees may have more of their wealth in the market over home equity, Snaith said.

While the report doesn't break down net worth by state, it pointed to Florida, California, Nevada and Arizona as states that saw home price declines of 40 to 50 percent. Iowa, the report notes, saw only about a 1 percent drop in prices.

"The prices are still languishing here," Snaith said about Florida.

The Associated Press contributed to this report.

The wealth of the median American family shrunk to 1992 levels as of 2010, according to a Federal Reserve report that singles out Florida as one of the states hit hardest by the Great Recession.

The Survey of Consumer Finance, released Monday, blamed a "broad collapse in housing prices" for the 38.8 percent drop in median net worth between 2007 and 2010.

"The amount of wealth destroyed by the housing crisis was trillions of dollars, and suddenly where there was a mound of wealth, consumers saw a crater," said University of Central Florida economist Sean Snaith. "It's one of the reasons I've been projecting the recovery to be as subdued as it has been."

The survey showed the median net worth of $126,400 in 2007 plummeted to $77,300 in 2010. Net worth is the value of assets like homes, bank accounts and stocks, minus debts like mortgages and credit cards.

Among families that owned homes, the Fed survey found that their median home equity declined from $95,300 in 2007 to $55,000 in 2010, a 42.3 percent drop.

"So much of your net worth is in the form of home equity and if you are in a county that had the steepest declines it would follow you would have greater declines in wealth than the average person," said Stan Geberer, a senior associate with the Orlando-based consulting firm Fishkind & Associates. "It's highly likely that many people in Florida were hit harder than average."

While home prices have inched upward in recent months in Palm Beach, Broward and Miami-Dade counties, they are still down 50 percent from their December 2006 peak, according to the most recent Standard & Poor's/Case-Shiller index.

Geberer said one positive economic sign in Monday's report is that costly credit card balances are down, meaning people are paying off bad debt. The proportion of

families carrying a credit card balance fell to 39.4 percent in 2010, a drop of 6.7 percentage points from 2007.

The median credit card balance also fell, dropping from $3,100 in 2007 to $2,600 in 2010.

Because the survey only contains information through 2010, it doesn't reflect more recent gains in the stock market, Snaith said. A separate survey the Fed released last week showed that total family net worth climbed 4.7 percent in the first quarter of the year to $62.9 trillion, about 28 percent above its recession low. The increase was fueled by stock market gains.

Those gains put net worth about 5 percent below its pre-recession peak of $66 trillion.

Those gains can be especially important to South Florida's economy where retirees may have more of their wealth in the market over home equity, Snaith said.

While the report doesn't break down net worth by state, it pointed to Florida, California, Nevada and Arizona as states that saw home price declines of 40 to 50 percent. Iowa, the report notes, saw only about a 1 percent drop in prices.

"The prices are still languishing here," Snaith said about Florida.

The Associated Press contributed to this report.


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