[hawkice]

Calculating how poor people are based on comparing against a time known to have unrealistically high and unsustainable housing prices, which made up a very large portion of net worth, seems like clickbait. We haven't re-entered a housing bubble massive enough to make every a paper millionaire. We shouldn't sulk about that.

[sillysaurus3]

It doesn't seem like clickbait. It seems pretty important to think about, actually.

Little story: In 2007, a member of my family landed a lot of signed contracts to commission him to do a certain type of job. These were actually so lucrative that he quit his dayjob.

Then 2008 happened. All of those signed contracts became meaningless. People simply said no, we're not paying you anymore, sorry. Fast forward a month, and he's contemplating ways to kill himself to make it look like an accident so that his family will keep their house via life insurance payments.

Luckily, things didn't turn out that way. He was able to get his job back. Somehow.

Might it be true that comparing the present to the lucrative year of 2007 isn't necessarily productive? Possibly. Probably. But it's an interesting historical perspective, and it's also interesting to remember how much people's faith in the economy matters. The type of work he was being commissioned for wasn't anything related to tech or housing. The ripples are profound, both in the upswing and the downswing.

[branchless]

Sorry to hear of his issues, but surely perpetuating high house prices means his children would also be under huge stress as they stretch themselves to the limit (and assume zero unemployment like this guy).

The "wealth" created by pulling forward demand through credit through housing wasn't real. That's why living standards fell - we stopped creating wealth and started adding zeros to numbers on a screen.

Reducing house prices means more disposable income for our children. And their children. And theirs.

Yes there was a hit to the housing crash, but only because the loss in living standards was a result of the misallocation during the "boom". 2008 was just Wile E Coyote looking down having already run off a cliff.

Want to avoid a fall? Don't run off the cliff. Not looking down isn't an option long-term.

[branchless]

Yes! Great post. As you note this is good news. If house prices stay at sane levels we will be able to have true wealth creation instead of money printing via housing which leaves the next generation impoverished.

We should celebrate a reduction in house prices as we celebrate the reduction in the cost of a laptop. More disposable income for the next generation and less going to the banks for creating money on a screen and then crediting your account with it.

[thaumaturgy]

I found a slightly older article which appears to use methodology that's at least mostly similar to Pew's (which is where this article came from). It includes a nice little graph: http://blogs.reuters.com/felix-salmon/2012/06/12/chart-of-th...

The $81,400 median net worth number cited in the article is roughly comparable to 1995 numbers in the article I found, which very well pre-dates the period that most people consider to be the beginning of the housing bubble.

The housing bubble is readily apparent in the 2004-2007 period in the graph I found, but there was still a period of rising median net worth from 1992 to 2004, most of which shows comparable or better median household net worth than today.

The article also directly addresses your point: "In 2007, median household net worth was $126,400, while the median amount of home equity was $110,000; in 2010 net worth had dropped to $77,300, while home equity had dropped to $75,000. These days, home equity is net worth." (i.e., the net value of a family's home is now pretty much their entire net worth; in 2007, that wasn't the case.)