Interesting data set from Dave Rosenberg:

• Households own $18.2 trillion of residential real estate, even after the value destruction of the past three years.
• Households own $18.1 trillion of equities, despite the vicious bear market.
• Households own a near-record $7.7 trillion of deposits and cash — earning next to nothing in yield.
• Households own $4.6 trillion of consumer durable goods.
• Households own $3.5 trillion of corporate bonds and municipal/agency paper.
• What do households own in Treasury notes and bonds? Try $800 billion.

Pretty fascinating stuff . . .

Category: Investing, Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

30 Responses to “A Quick Look at Household Balance Sheets”

  1. DeDude says:

    Not my household ;-)

  2. boratsagdiyev says:

    Anyone have the link from a few months ago where Barry posted 4 possible charts for S&P, probably from Dave Singer?

    One scenario showed S&P hitting a new low sometime in 2010 and one scenario showed the rally continuing.

  3. TakBak04 says:

    Seems the public need to own a bigger share of Treasury Notes and Bonds. Wonder why they don’t? Hard to figure that Real Estate number since there are so many foreclosures, plus homes on the market where the seller hasn’t reduced the price enough to get a buyer. How could RR be valued since things are still in flux? How does one place a value on Consumer Durable Goods?” Is it value at purchase and if they are held don’t they depreciate? I take him at his word figuring for sure he’s done the research, but would like to read more of where the original figures came from.

    BR: do you have a link to the Rosenberg article?

  4. hgordon says:

    Interesting to also look at what level these numbers peaked. Here’s a WSJ graphic version –
    http://online.wsj.com/article/SB126046526493985947.html

    Looks like the total peaked at $80 trillion in ’07, dropped to $62 trillion in 1Q09, and clawed back to $68 trillion in 3Q09, so it’s probably somewhat north of $70 trillion now.

  5. flipspiceland says:

    And what to do they OWE against all that and what is not listed?

    What is their NET worth?

    And what are those dollars worth that were invested in that real estate 30 years ago?

  6. Steve Barry says:

    If it’s a balance sheet, what about the liabilities???? You only listed assets.

  7. torrie-amos says:

    so roughly 35T still to be stolen

  8. hgordon says:

    Here is the source of the numbers -
    http://www.federalreserve.gov/Releases/Z1/current/z1r-5.pdf

    Liability side is around $45 trillion

  9. ewmayer says:

    Meaningless unless one does 2 things:

    1. Subtracts total household liabilities;

    2. At least tries to do some kind of mark-to-market valuation of the alleged non-cash “assets”.

    IIRC, (1) totals up to around $16 trillion. Regarding (2), I would argue that despite the “value destruction” due to the popping of the Great Greenspan Housing Bubble and the ensuing “vicious bear market” in equities, both housing and equities are *still* significantly overpriced. Case-Shiller data and the huge amount of overt and covert housing-inventory-still-needing-to-be-foreclosed-on-and-repriced back up the housing part of that assertion; Barry, your recent historic data on the S&P500-vs-GDP ratio – which puts last March’s S&P “bottom” near the *high* end of the historic range pre-Greenspan-bubble-era – back up the latter. So I’d say you can easily knock another ~20% or more off that alleged $40 trillion in household/equity/corporate/muni-bond “wealth”. Subtract the total household debt owed and you’re left with total net assets of around 1x GDP.

    Of course we (and our descendants) are also on the hook for the liabilities of the U.S. government, which are over $60 trillion (over 4x GDP) and rising fast.

    Wealthiest nation on Earth? Only if we ignore that annoying minus sign in front of the number.

  10. ZackAttack says:

    I saw this posted around in a couple of places today, attributed to something called creditkarma.com:

    “In January 2010, the average consumer *with an account* had:

    $7,925 in credit card debt
    $180,190 in home mortgage loans
    $51,919 in home equity loans
    $14,736 in auto loans
    $26,337 in student loans”

    Taking all this to mean “those people who actually had debt of the specified type.”

    So that would be about $280K in debt, vs (per CIA factbook) a median per capita income (not household income) of $42K.

  11. tagyoureit says:

    $158,260.87 RE
    $157,391.30 Equities
    $66,956.52 Cash
    $40,000.00 Durable goods
    $30,434.78 Corp Bonds/Muni
    $6,956.52 T-Notes

    115 million households 2010 according to http://www.census.gov/prod/1/pop/p25-1129.pdf

  12. call me ahab says:

    “What do households own in Treasury notes and bonds? Try $800 billion.”

    that will change soon enough- when the USG forces people into “safe” retirement accounts consisting of 10 year notes and 30 year bonds-

    for those who don’t want to convert- 100% penalty for early withdrawals on their 401k/retiement accounts-

    and when the TPTB are asked why- ala Willie Sutton- they will say-

    “because that’s where the money is”

  13. Robespierre says:

    None of these mean anything UNLESS they can be monetized in a pinch. Since I suspect a lot of this “wealth” is in the hands of them boomers how do you monetize in absence of demand without deflating that “wealth”?

    “Households own $18.2 trillion of residential real estate, even after the value destruction of the past three years.
    • Households own $18.1 trillion of equities, despite the vicious bear market.”

  14. tagyoureit says:

    Total mortage debt outstanding 14,640 billion (2008), per household (2010) = 127,303.5

    Let’s call RE equity around $30k/household, excluding other debt. It just so happens your friend here is only mostly dead. – Miracle Max

    http://www.census.gov/compendia/statab/cats/banking_finance_insurance/payment_systems_consumer_credit_mortgage_debt.html

  15. Invictus says:

    Rosie is including Line 25 (Table B.100) — Mutual Fund Shares — as part of the $18.1 trillion of equities. I believe Mutual Fund Shares includes ALL mutual funds: equities, fixed income (corporate, muni, treasury, etc.), commodities, etc., etc., and that consequently the total penciled in for equities may be overstated (but not by much, to be sure).

    That said, his point regarding the under-ownership of Treasuries is well taken.

  16. Steve Barry says:

    Let’s try to get median values…because the top fat cats are greatly throwing off the mean.

  17. tagyoureit says:

    You guys kill me, now you median figures!??! Kidding, I hear ya. I mean, I’m *trusting* government data is accurate!

    So, $53.4T net worth 12/2009, that’s $464,348/household (incl. fat cats) or another way to look at it

    •5991 bbl oil @ $77.5
    •414.78 troy oz = 28.4420571 pounds gold

    Anyone know the market price for salt? I want to know net worth in lbs of salt. I’m wondering if the average american is worth his salt! LOL

  18. dead hobo says:

    torrie-amos Says:
    February 17th, 2010 at 3:03 pm

    so roughly 35T still to be stolen

    reply:
    —————–
    Things I wish I said

    On another topic; I live is a smallish town surrounded by a lot of other towns. According to Yahoo foreclosures today, there are well over 150 foreclosures at this time. Three are in my neighborhood and the number rises a lot if I travel about a mile away into another neighborhood. Perhaps 6 + months ago the numbers were similar with different houses, both town wide and neighborhood wide. Zillow says my paid for house is worth only a little above what I paid for it 10 years ago.

    I read the optimistic headlines. I listen to the sell siders. Then I look at yahoo and zillow.

    BTW, what percentage of home value do the Fed and the GSEs own?

  19. constantnormal says:

    I think when John & Jane Q Public look at the yields Treasury debt is offering, and think about the potential for growth vs the potential for inflation, Treasuries kinda loose their luster.

    Not that any of that other stuff is likely to do better in an inflationary environment, but at least it’s easier to fool oneself that stock in the XYZ Company is going to explode upward, and all that anyone can see Treasury debt doing is basically nothing, while the cost of living moves ever upward (in terms of educational expenses, drug and health care expenses, and gasoline).

    Why would anyone loan money to a government whose goal is to pay it back in depreciated dollars?

    Why not loan it to Greece? At least the yields are better there :-)

  20. PPDCUS says:

    The Emperor’s New Weimar Space Ship

    Interesting statistics, but household net equity and income to debt service is the real story in residential real estate. When over 20% of today’s U.S. households with a mortgage are upside down, MEW dependent consumer spending patterns from the late 1990′s through 2007 have been permanently shifted downward into the survival zone.

    Our regular economy where people live, work, earn, save, invest, consume & pay taxes has been displaced by the financial and governmental capture economies. No regular business can compete for capital or financing with the YTM returns available in the latter two economies. With 70% of GDP generated by consumer spending and with exponentially exploding Federal debt, unfunded SS & Medicare liability, under capitalized insurance risk and pension funds, this scenario is absolutely unsustainable.

    Wall Street and Pennsylvania Avenue’s down the road can kicking, extend and pretend, privatized profits with socialized losses strategy?

    Larry Summers: We’re traveling in a space ship to explore the sun.

    U.S. Citizens: You can’t do that … You’ll burn up!

    Tim Geithner: No worries …. We’re going at night.*

    * Rubinomics 2.0 is relying on the entire country simultaneously failing 4th grade arithmetic and 9th grade civics.

  21. cognos says:

    A few points, conjectures…

    1) It looks like those numbers are NET (i.e. after debt)

    2) This follows in terms of residential real estate, from the simple metric that about 1/2 of all houses have NO mortgage. So if $10T is approx outstanding mortgage… then $12-14T is approx the housing stock of “mortgage free properties”. Then the rest have (in this environment) a sliver of net equity.

    3) As far as USTs… some of the Tbill and even TNote holdings are probably captured in the “cash account” through money market sweeps and ST mutual funds. BUT… there are also very few longer term treasuries available. “Net external debt” is far lower than the oft quoted “national debt” which includes lots of “inter-account transfers” mainly from the social security trust fund (money we owe ourselves). I think “net external debt” is about $10T. And ~50% of that is in bills. Another 25% in Notes (2-5yrs) and the remaining 25% in Bonds (10-30yr). Of course, since long “bonds” last for 10-30 years… only 5% of them get issued every year, or roughly 25% x 5% = 1.25% of our debt… or $125B annually (plus any new dificit). In the big scheme of world asset flows $2.5T in long duration treasury bonds… is tiny.

    4) Who was the silly poster who compared “average household debt” with “median per capita income”? Why not compare it to average household income — which is about $150,000/yr?

    AND AGAIN(!)… we are large “net asset” holders… the debt is not owed to “the man”… its owed to ourselves. One man’s “savings” is another mans “debt”. Old people “save” for retirement and lend it to young people for student loans, credit cards, and home mortgages. Money only pays interest when it is lent.

  22. I just thought it was an interesting data series.

    I don’t recall ever seeing all of these asset classes laid out this way in one place.

  23. bennypaul says:

    Good point to ask a question:

    what is the best alternative to improve the 1.5 percent on my cash

    1. Ladder GO municipals
    2. Ladder treasuries after a rise
    3. Buy Richard Lehmann type recommendations (corporate preferred Goldman example with rate protection) laddered or without ladder
    4. Straight investment grade corporates laddered
    5. Other ideas

  24. constantnormal says:

    One nit to pick: from the Fed data that hgordon provided the link to:

    Real estate ……. $18248.3B
    households ….. $16536.8B
    nonprofit orgs …. $1711.5B

    So unless there is a Good Reason to include nonprofit organizations’ real estate lumped in with residential real estate in our little exploration, it ought to be $16.5T instead of $18.2T.

    It just seemed that $1.7T was worth quibbling over.

  25. constantnormal says:

    Is there a consensus whether these numbers represent net of outstanding debt?

  26. constantnormal says:

    If you want to get a notion of just how skewed the mean per-household numbers are — how totally removed from reality they are — take a look at this link:

    http://www.faculty.fairfield.edu/faculty/hodgson/Courses/so11/stratification/income&wealth.htm

    Things have become considerably more skewed to the upper end in the years since 2004.

  27. constantnormal says:

    Ummmmm … looking at the Fed Z.1 report, it seems clear to me that these numbers are NOT net of outstanding debt:

    On the liabilities side of the ledger:
    $10.3T — residential mortgages, including HELOC
    $2.5T — consumer credit

    an assortment of other much smaller debt items that it is difficult to apportion between residential and other uses.

  28. Pat G. says:

    Well, households owe a whole hell of a lot less when you take into consideration the debauchery which is occuring in the USD. But like Ben says in the Onion piece…currency is a shared illusion. Your valuables are only worth what someone else is willing to pay for them and perhaps that’s the greater illusion.

  29. constantnormal says:

    Anyone wonder why the Fed chooses to lump households and non-profit organizations together in the reporting of this data?

    Are they trying to imply something?

    BTW — this is why we see almost 67 grand in the bank when we divvy it up on a per household basis. Almost all of that is undoubtedly non-profit organizations’ bank accounts. NO American keeps significant amounts of cash in the bank, we either “invest” it or spend it.

  30. cognos says:

    constantnormal –

    why do you say they are not net?

    The US residential real estate stock is worth approx $25T. This is held by households with approx $10T in MBS debt. Thus the “NET” asset holdings of real estate is approx $15T.

    Again, this “MBS debt” is then just sold back to fixed income funds, pension funds, and banks and becomes part of the savers “net” asset holdings. That is, funds are being “lent” from savers to early mortgage holders.

    But fully 1/2 of all homes in the US have NO mortgage. They are owned outright. This is a large “net” asset. There are also large net stock equity assets, large net cash savings assets. We are “net” wealthy. Its funny how easily people forget this…