![]() ![]() This is the overwhelming pattern in housing markets, and it did not shift during the housing boom. We especially see this in the housing market, where young owners tend to be very highly leveraged and older owners tend to be unencumbered or lightly leveraged. Older households tend to have high net worth and younger households tend to have low net worth. More importantly, in terms of wealth, age is at least as important as income. Actually, most debt is held by households with high incomes, and households with middle-to-high incomes tend to be the most leveraged. But, as JW Mason pointed out in the paper I linked to yesterday, this net debt distribution hides a lot of stuff going on at the gross level. Rich households are savers and poor households are borrowers. This is a point of disagreement I have with Mian and Sufi. The bust was largely a bust among young people. It is only households in the top quintile who are willing, in the aggregate, to spend more than the toll value for more shelter. So, owners across the bottom 80% of the income distribution all own homes with average values of about $400,000. In the Closed Access cities, homes are toll gates to labor markets, and it appears that now, that toll is about $400,000. Values tend to rise starting with the third quintile, increasing with each quintile.except for the Closed Access cities. Most first and second quintile owners are older owners who bought their homes many years ago, so values are generally flat across the low quintiles. This is a graph of the average home value, by owner income. This first one gives an indication of the "house as entry fee" phenomenon in the Closed Access cities. I don't think I have shared these before. ![]()
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