Friday, June 12. 2009
Flow of funds: owners equity update
Owners equity in household real estate, %GDP, 1952-2009
Yesterday's Flow of Funds gives us the update above. Equity in real estate continues to vaporize. And the scary thing is, household real estate isn't even cheap yet. On a historical relative-to-GDP basis, it remains at elevated levels never seen before the current bubble.
Household real estate assets, %GDP, 1952-2009
I suppose the good news is, we only have to drop ten or twenty percent more to return to 1980s peak values for houses. The bad news, alas, is what that will do to owners equity and what the wealth effect means for future consumption.
Green shoots are nice to see, but the outlook for US households isn't pretty.
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