Saturday , October 23 2021

US household net worth hits record on home values

Bloomberg

US household net worth surged to a fresh record in the second quarter as Americans enjoyed an ebullient stock market and largest-ever increase in value of their real estate holdings.
Household net worth increased by $5.8 trillion, or 4.3%, to $141.7 trillion in the second quarter, a Federal Reserve report showed. The advance included a $3.5 trillion gain in the value of equities and a $1.2 trillion improvement in real estate held by households.
Stocks have surged to record highs, and low borrowing costs have supported a flurry of home buying — and ultimately home price appreciation. The figures highlight how the massive support provided by the government and the Fed has bolstered Americans’ wealth.
Equity shares as a percent of total household assets rose in the second quarter to almost 29.5%, up from 25.6% in 2019, the Fed’s report showed.
But not everyone is benefiting from those wealth gains. A large share of Americans are not invested in the stock market, and for many renters, the sharp rise in housing prices pushed the reality of owning a home further out of reach.
Net private savings grew at an annualised pace of almost $2.9 trillion in the second quarter after a $4.8 trillion surge in the prior quarter — a product of federal stimulus efforts. Excess savings have been a key driver of consumer spending, including last quarter, where consumer outlays jumped at one of the fastest paces on record.
Business debt outstanding increased by $63.2 billion from the prior quarter, or at an 1.4% annualized rate, in the April to June period to a total of nearly $18 trillion.
Federal debt outstanding increased $578.8 billion, or an annualised 9.6%, to $24.7 trillion. Government debt swelled during pandemic, as policy makers stepped in to ease the economic impact of the health crisis on people and businesses with
trillions of dollars of support.
The government is currently on track to default on its financial obligations without congressional approval to raise the statutory limit on US debt.
Consumer credit outstanding not including mortgage debt rises by $91.2 billion in the
second quarter.
Meanwhile, monthly condo fees have surged in the US to help cover higher bills for electricity, repairs and wages for front desk staff.
The monthly median fee set by condominium homeowners associations jumped 19% from a year earlier to about $451 in August, according to data compiled by Zillow Group Inc. That amounts to an extra $900 per year to residents’ budgets.
Fees are rising in part because inflation and labor shortages have increased the prices of everything from energy to landscaping. Maintenance and repairs are also more frequent because more people are working from home and their children.
In addition, the deadly collapse of a condominium building north of Miami in June has resulted in newfound attention to safety standards.
An estimated 74 million people live in communities managed by homeowners associations, which determine what services to provide and at what cost for the communal parts. Condominiums account for about 35% to 40% of the total, according to the Community Associations Institute.
Amenities and the age of the building play a large role in median rates, which vary widely across metropolitan areas. In New York City, which has an abundance of older housing stock that wastes more energy than newer buildings, the median monthly fee is much higher than the rest of the country. It rose 22% from a year earlier in August to $948.
In San Francisco, where many residents packed up and left during the pandemic, fees have fallen from a year earlier. The median monthly cost was down 6.3% to $454 in August.

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