Fewer Younger, Richer Households Have Negative Home Equity

November 17, 2014
By  Juan M Sanchez Lijun Zhu

In a previous post, we showed that, according to the Federal Reserve’s Survey of Consumer Finances, many households remain underwater on their mortgages. Additional research shows that, together with home equity, the ages and incomes of households are important determinants of mortgage defaults. This post shows how changes between 2010 and 2013 in the percent of households with negative equity vary by age and income.

The overall ratio of households with negative equity to the total number of households with mortgages decreased 1.2 percentage points between 2010 and 2013. The table below further decomposes this overall change into two subgroups, according to income and age.

negative household equity

The results are striking. While this ratio increased from 13.5 percent to 16.0 percent for households with yearly incomes below $60,000, it decreased from 12.8 percent to 9.5 percent for households with yearly incomes above $60,000.

The change in the percent of households with negative equity also varies across age groups. From 2010 to 2013, it decreased from 18.8 percent to 13.5 percent, for younger households, while it increased slightly (0.3 percentage points) for older households.

Thus, the aggregate decline in the percent of households with negative equity is driven only by changes for richer and younger households. The opposite trend is actually observed for poorer and older households.

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About the Author
Juan Sanchez
Juan M Sanchez

Juan M. Sánchez is an economist and assistant vice president at the Federal Reserve Bank of St. Louis. He has conducted research on several topics in macroeconomics involving financial decisions by firms, households and countries. He has been at the St. Louis Fed since 2010. View more about the author and his research.

Juan Sanchez
Juan M Sanchez

Juan M. Sánchez is an economist and assistant vice president at the Federal Reserve Bank of St. Louis. He has conducted research on several topics in macroeconomics involving financial decisions by firms, households and countries. He has been at the St. Louis Fed since 2010. View more about the author and his research.

This blog offers relevant commentary, analysis, research and data from our economists and other St. Louis Fed experts. Views expressed are not necessarily those of the St. Louis Fed or Federal Reserve System.


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