Turmoil in the real estate market could hurt the finances of many older U.S. workers who have been counting on home equity to help fund their retirement.
Dean Baker and David Rosnick, researchers at the Center for Economic and Policy Research, Washington, come to that conclusion in an analysis of the effects of the current economic slump on the amount of net worth that typical families get from their homes.
The researchers have based their mid-range projections on the assumption that median, inflation-adjusted house prices will be 10% lower in 2009 than they were in March 2008.
The slump seems to have had the harshest effect on households with heads in the 35-44 age category, the researchers write.
The median Generation X household could arrive at 2009 with about $31,000 in net worth in 2008 dollars, down from an inflation-adjusted median of $57,000 in 1989 and $72,000 in 2004, the researchers write.