by Calculated Risk on 3/11/2010 12:14:00 PM

Update: corrected mortgage debt amount.

The Federal Reserve released the Q4 2009 Flow of Funds report today: Flow of Funds.

According to the Fed, household net worth is now off $11.8 Trillion from the peak in 2007, but up $5.0 trillion from the trough last year. A majority of the decline in net worth is from real estate assets with a loss of about $7.0 trillion in value from the peak. Stock market losses are still substantial too.

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 we saw the stock market and housing bubbles.

This graph shows homeowner percent equity since 1952.

Household percent equity (of household real estate) was up to 43.6% from the all time low of 40.8% last year. The increase was due to both an increase in the value of household real estate and a $72 billion decline in mortgage debt.

Note: something less than one-third of households have no mortgage debt. So the approximately 50+ million households with mortgages have far less than 43.6% 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 $53 billion in Q4. Mortgage debt has now declined by $290 billion from the peak, but that seems insignificant compared to the $7 trillion decline in household real estate value.