<p>"The Commerce Department focused on cash flow, Knetter said. “Using that method, you look at how much income is earned in a year and how much is not spent,” he said. “But it’s not the whole story.”</p>
<p>The purpose of savings is to accumulate wealth, Knetter said, and family wealth is increasing.</p>
<p>‘Growing stockpile’</p>
<p>The Federal Reserve reports that American households had a total net worth of about $51 trillion as of last fall. It was $40.7 trillion in 2001.</p>
<p>If consumers feel confident that their wealth has gone up, Knetter said, then who should tell them that they didn’t save enough?</p>
<p>“The steadily growing stockpile of family wealth is a better summary measure of how we are providing for the future than the flow measure of the savings rate,” Knetter said. “We should look at what happened to our net national wealth and not get too obsessed with the savings rate.”
…</p>
<p>I wonder how much of the increase in net worth is attributable to the housing bubble? If you live in the same house you lived in 10 years ago, your salary hasn’t gone up more than 3% in any one year, you’re afraid yur job might be outsourced or otherwise disappear through rif’s, yet your net worth has gone up tremendously because the value of your house has doubled. But you can’t sell it unless you scale down your life style. That set of circumstances is what economists might call increase in net worth, but what most people call “anxiety”.</p>
<p>Hayden, good base, add increasing health care costs and less insurance coverage into the mix. I work with some fairly affluent clients, most of whom are on far sounder financial footing than I am…none of them are as carefree as Barrons.</p>
<p>my house has increased in value $16,000 average every year that we have lived here ( 23 years)
Of course that doesn’t take into account the cost of normal maintainance like repairing the 104 year old siding, replacing the 30 year old roof or bringing the wiring up to code.
It also isn’t money that we can put in our pockets, unless we happen to find a cheaper place to live- like perhaps in our car? our rolling slums</p>
<p>You can take out a reverse or regular mortgage and put the $$$ towards other uses like living expenses in retirement. Or you can sell and rent or buy a smaller lower maintenance place while pocketing the equity. There are many ways to tap into the home equity to use for other purposes/many tax free. Your kids might be ****ed you don’t leave them much but that’s why you sent them to college.</p>
<p>I would worry about people taking out a larger equity loan than they can keep up with the payments on, and losing their home- a very real fear, if you are having to take out a mortgage to pay living expenses</p>
<p>There are many relatively reasonably priced rental units for those over 55 in Seattle and many other cities. Quite frankly one or two older persons living in a household no longer need a 2,000+ square foot house to live in, pay taxes on, pay utilities on etc. It’s wasteful and would be put to better use for a younger family. You can also buy a decent condo for half the price of the average SF home in most areas. </p>
<p>Most of it. If they are going to discuss changes in household net worth they really should state how much of the change is due to the value of real estate. </p>
<p>I don’t think Bush deserves credit for this increase in household wealth.</p>
<p>I dont think the point was- is sanfrancisco even more expensive than Seattle.
It was 30 years ago- and I expect that is still true.
I think it would be ridiculous to buy a condo.
My mother sold her house, and bought a condo, and even though it was intially paid for, she still has condo fees of hundreds every month , and they go up-( this is a one bedroom). Not to mention the material that it was built from is not made for this climate, so it will cost each owner thousands to have the exterior completely replaced.
(It apparently has been past the brief period that they could sue the builder unfortunately)
At least our house was standing for 82 years when we bought it, and I expect it will be standing for at least 25 more, at least until we are done with it
( not to mention at less than 1000 sq ft already, how much smaller do you expect us to go? )</p>
<p>Earn your share: so the people working 2 jobs at minimum wage, doing work to keep this country working, eh, they aren’t doing their share</p>
<p>my point was that while the headline you shared looks “impressive”, it really only reflects that while many Americans are doing so much worse, a few are doing better, but they really haven’t done their share</p>
<p>do musicians really do their share, do CEOs really do their share, come on, even you barrons, can’t dispute that your headline was to give the impression that most people are doing so much better, when, gee, not true</p>
<p>while this article focuses on Illinois, in fact this phenomenon of the growing gap between the rich and poor is true throughout the country. Barrons doesn’t care because he/she is on the good side of the gap and because of the stunning selfishness that characterizes the Bush administration and its supporters.</p>
<p>well if you averaged the size of houses among my friends- you would probably get 2,000sqft( or maybe a little less)- however of the people who have 8,000 sq ft homes- in the city- they are not really concerned about how to pay for retirement- its the people who are living more modestly in the first place- who really hurt when their stock investments took a dive a few years ago, I don’t think we have still made up for the money we lost. :(</p>
<p>2000 sf is about the average for a house in the US. Very few builders today build anything less with most 2500 and up except for condos. With 69 percent of US households owning a home it seems rather likely that most have some gain in net worth due to home appreciation alone.</p>
<p>Also my data is about WEALTH, not income. Now certainly income helps create wealth but so do many other activities such as rehabbing an old house, saving and investing, etc. I know several middle-income guys that have a high level of wealth because they eschewed the stock market and bought rental properties that they fixed up and held.</p>
<p>the size of an average new home might be 2000 sq ft- but how many sales are new homes and how many are prexisting?
In the city like Seattle you aren’t going to get a lot of new construction unless you are talking condos.</p>
<p>I think the dissension readers of the article feels stems from using housing inflation as creation of wealth.
when homes are overpriced- the bubble eventually pops and people are stuck with a mortgage that is more than what they can get out of their home.
From Forbes</p>
<p>Over the last 50 years it is hard to find a better sounder investment than single-family real estate. I would take any Seattle home that anyone wants to sell at market anywhere in the city and be confident that in 20 years it will be worth two to three times what I paid if not more. There might be some slight dips over that time but every dip has been followed by a boom that brings values to new highs. Condos are more iffy but in Seattle they are not wildly over-priced yet.</p>
<p>The financial mafia loves to poo-poo home investment because they are out of the $$$ on those deals. They can’t sell stock recommendations and earn fees on home deals. They are so greedy that they will say absolutely anything to steer $$$ into their hands. Anyone who listens to WS pundits is a fool.</p>
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