Link: http://www.boston.com/business/articles/2008/03/06/homeowner_equity_is_lowest_since_1945/

The article begins,

Americans’ percentage of equity in their homes fell below 50 percent for the first time on record since 1945, the Federal Reserve said Thursday.

Homeowners’ portion of equity slipped to downwardly revised 49.6 percent in the second quarter of 2007, the central bank reported in its quarterly U.S. Flow of Funds Accounts, and declined further to 47.9 percent in the fourth quarter – the third straight quarter it was under 50 percent.

That marks the first time homeowners’ debt on their houses exceeds their equity since the Fed started tracking the data in 1945.

The article goes on to say that over 10% of homeowners will have zero or negative equity by the end of the month.

It is worth noting that for many homeowners, particularly in coastal states, increases in home equity are a higher figure than their gross income, and certainly a good deal higher than their annual savings or funds placed into their individual retirement plans.

If you’re curious about how home equity (and other asset) holdings were distributed in 2004, you might look at these tables, created from Currents and Undercurrents: Changes in the Distribution of Wealth, 1989–2004, by Arthur B. Kennickell of the Federal Reserve Board http://www.wealthandwant.com/issues/wealth/Currents_Undercurrents_8904.htm. They lay out, for the bottom 50% of us, the next 40%, the next 5%, next 4% and top 1%, various measures of assets, for 1989 and 2004. Look in particular at line 44 of each table, which represents home equity. It is the most broadly held asset, other than vehicles. And yet even it is quite concentrated, and the holdings of the top 1% have risen far faster than the holdingsrf of the other quantiles.

The comparison between the 2004 and 2007 SCF (Survey of Consumer Finance) should be quite interesting. I expect that nothing will be published until a few months after the election.