Median family net worth plunged by close to 40 percent during the economic crisis, the report found. The study shows that the real estate market's collapse was largely responsible for the decrease: Family median income before taxes fell 7.7 percent and non-housing assets also depreciated in value. But the Fed said plummeting home prices issued the largest blow to families' net worth.
"Although declines in the values of financial assets or business were important factors for some families, the decreases in median net worth appear to have been driven most strongly by a broad collapse in house prices," the report said.
The report also said that the recession hit the U.S. middle class hardest, since much of their wealth was concentrated in their homes.
National Association of Home Builders CEO Jerry Howard says its findings suggest that the housing slump remains one of the largest roadblocks to an economic recovery. In fact, the report is a call to action for the U.S. government, he says, which should do more to revive the real estate market.
"In [government] conservatorship [Fannie Mae and Freddie Mac] are as close to being dead in the water as you can possibly be," he said. "In these current climates, the access to mortgage credit is so restricted that it is an impediment to the recovery, not just because people can't get it, but people are afraid to apply for it because it is such a burdensome and intimidating process right now.
Howard believes that lenders, many of whom service mortgages that conform to Fannie Mae and Freddie Mac-dictated requirements, should perform more "holistic" evaluations of mortgage applicants. But other experts see current mortgage requirements as appropriate, given the lax standards of the housing boom, which Howard admits made it "much, much too easy for people."
The government's failure to do more to jumpstart the housing market betrays its 50-year history of championing homeownership, Howard says.
"For most baby boomers, from the time that they entered the job market, they were encouraged to build your ... nest egg around housing."
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