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The distribution of wealth among U.S. households became increasingly unequal from 2007 through 2016 as a decline in homeownership and home values impacted the wealth of middle-class families. That is according to a new research report, The Distribution of Wealth Since the Great Recession, recently released by the Mortgage Bankers Association’s (MBA) Research Institute for Housing America (RIHA).

Dr. John C. Weicher, author of the report and director for the Center for Housing and Financial Markets at the Hudson Institute, said the primary sources of wealth for most middle-class households are the assets in their retirement accounts and the equity in their homes. The bottoming out of home prices through 2012 and the 4.5 percent drop in the homeownership rate through 2015 both contributed to the decline in the median real household net worth, from $140,000 in 2007 to $97,000 in 2016—30 percent lower than before the financial crisis.

“The typical household by 2016 was wealthier than it was in 2013, but significantly poorer in comparison to its situation in 2007. These findings offer solid evidence as to why over half of Americans have consistently expressed in countless surveys that the country is not moving in the right direction,” said Weicher. “Middle-class households did not fully recover from the financial crisis, and the poor saw their net worth turn negative and stay negative. Meanwhile, the rich recovered faster and their share of wealth increased from 71 percent in 2007 to 77 percent in 2016. The result is a less-equal America, and many families that fell behind have reasons to worry as they cope with the pandemic and move closer to retirement.”

Added Weicher, “Inequality may have improved in recent years because of the increase in home prices, the rising homeownership rate, the stock market’s steady ascent, and recent policy changes that have reduced tax burdens and made it easier to save for retirement. Unfortunately, the pandemic has likely offset these changes—and especially for lower-income individuals working in jobs adversely impacted in the last nine months.”

RIHA’s report used data from the Federal Reserve Board’s triennial Survey of Consumer Finances (SCF) to study the distribution of household wealth, its main components, and how the evolution of household wealth through the Great Recession—and its aftermath and subsequent recovery—affected poor, rich, and middle-wealth households. The top 10 percent of households, by net wealth, are classified as rich, and the bottom 30 percent as poor.

Key Findings of The Distribution of Wealth Since the Great Recession:

– The distribution of wealth became increasingly unequal between 2007 and 2016, markedly more so than during the period of increasing total net worth that preceded it from 1992 to 2007.

– The Great Recession affected the rich as well as the poor, but the rich were less affected. The total net worth of the rich declined by 11 percent, from $53.5 trillion in 2007 to $47.9 trillion in 2010. The net worth of the middle class declined by 20 percent and the debts of the poor increased by 60 percent, leaving them with negative net worth as a group.

– The wealth of the typical family dropped sharply from 2007 and, at least through 2016, did not recover.

– These changes are largely due to the sharp drop in homeownership: From 2007 to 2015, the homeownership rate fell by 4.5 percentage points—over 6 million families.

– Average real net worth was $45,000 more (7 percent higher) in 2016 compared to 2007; median real net worth was $43,000 less (30 percent lower).

– Various signs suggest that improvement occurred from 2016 to 2019—notably the increase in home prices, the rising homeownership rate, and the rise in the stock market.

“Dr. Weicher’s study gives a comprehensive look at the wealth disparities and recovery patterns that rich, middle-class and poor households experienced in the years after the Great Recession,” said Edward Seiler, executive director, Research Institute for Housing America, and MBA’s associate vice president, Housing Economics. “Fast-forward to 2020, and much of the financial distress caused by the pandemic is again being felt by those with less wealth. Although the homeownership rate is lower today, the good news is that those who do own have likely seen their wealth increase from the steady rise in home values in the past several years.”

Added Seiler, “If the pandemic lasts well into 2021 and millions continue to stay unemployed, there’s real risk that inequality will increase.”