NEW YORK (MainStreet) Young families are worse off today than they were 24 years ago. That's the startling conclusion of research conducted by the Federal Reserve Bank of St. Louis. The average young family -- households headed by someone under 40 has suffered the most during the financial crisis and subsequent recession, recovering only about one-third of the net worth they lost since 2007.
The collapse of the housing market bears most of the blame.
Young families have abandoned homeownership in large numbers, primarily due to foreclosures, distressed sales and a delay in buying into the market by newly-formed households. That means rebounding home values have been missed by so many of the young families that would have had the most to gain.
The St. Louis Fed says the "real" wealth of a young family net worth adjusted for inflation - was about $108,000 at the end of the third quarter of 2013, 30% below its 2007 level and more than 8% lower than the 1989 level -- a period of 24 years.
The national rate of homeownership has fallen for nine years in a row, falling from its peak of 69% in 2004 to 65.1% in 2013 a level first surpassed some 34 years ago. Young adult families have particularly turned their backs on homeownership: from 50.1% in 2005 to 42.2% in 2013. Families headed by someone between the ages of 24 and 38 in 2007 (born between 1969 and 1983) experienced the largest declines in homeownership rates from the peak levels attained for their stage in the life cycle.