Real Estate, Stocks Bump Up Net Worth

Rising real estate prices and a resurgent stock market pushed the net worth of U.S. households to a record $48.5 trillion in the fourth quarter, the Federal Reserve said Thursday.

In its quarterly “flow of funds” report, the central bank said household net worth rose nearly $2 trillion in the quarter, from $46.6 trillion at the end of the third quarter.

The Fed said total assets owned by households were worth $59.2 trillion at the end of the fourth quarter. Subtracting total debt of $10.7 trillion left the net worth figure of $48.5 trillion.

The Fed counts nonprofit organizations’ assets and liabilities with household sector data.

Higher values for real estate, stocks and mutual funds led the fourth-quarter net worth jump, the Fed said. Pension fund reserves and Treasury securities also posted big gains.

The gross value of residential real estate was $17.2 trillion at the end of the quarter, up from $15.1 trillion a year earlier, the Fed said. Subtracting mortgage debt of $7.5 trillion, Americans’ homes were worth a net $9.7 trillion, up 13% from a year earlier.

The net worth of residential real estate has rocketed 47% since the end of 2000, compared with a 9% rise in the value of financial assets owned by households and nonprofit groups. Financial assets, including stocks, bonds, bank accounts and pension accounts, totaled $36.8 trillion at the end of last year, up 8% from a year earlier as stocks continued to recover from the 2000-02 bear market.

The value of total household assets has risen nearly 20% since the end of 2000. But borrowing has risen at a much faster pace: Outstanding debt owed by households has soared 45% in the period, the Fed said.

Total debt rose 11.7% in 2004.