by Calculated Risk on 12/10/2009 11:59:00 AM

The Fed released the Q3 2009 Flow of Funds report today: Flow of Funds.

According to the Fed, household net worth is now off $11.9 Trillion from the peak in 2007, but up $4.9 trillion from the trough earlier this year.

Click on graph for larger image in new window.

This is the Households and Nonprofit net worth as a percent of GDP.

This includes real estate and financial assets (stocks, bonds, pension reserves, deposits, etc) net of liabilities (mostly mortgages). Note that this does NOT include public debt obligations.

Note that this ratio was relatively stable for almost 50 years, and then ... bubbles!

This graph shows homeowner percent equity since 1952.

Household percent equity (of household real estate) was up to 38% from the all time low of 33.5% earlier this year. The increase was due to a slight increase in the value of household real estate and a decline in mortgage debt.

Note: approximately 31% of households do not have a mortgage. So the 50+ million households with mortgages have far less than 38% equity.

The third graph shows household real estate assets and mortgage debt as a percent of GDP. Household assets as a percent of GDP increased in Q3 because of an increase in real estate values.

Mortgage debt declined by $70 billion - but will have to decline substantially (as a percent of GDP) to reach more normal levels.