What is the Value of the US Housing Stock?

One of the recurring problems in analyzing the U.S. housing market is that there is no central registry of houses that would allow a researcher to calculate the value of all houses and examine the mortgages associated with them, analogous to the databases available for public corporations such as Compustat. Instead, housing researchers must gather their data from different sources and the numbers frequently provide modestly different pictures depending upon how data are compiled.

For the value of homes in the U.S. there are two primary sources: the American Housing Survey from the Census Department and the Flow of Funds report from the Federal Reserve Board.

From the American Housing Survey (table 1A-7 on page 10), we see that the median price of the 75 million privately owned US homes was $165,300 in 2005, meaning that half the houses were worth less than $165,000 and half more (some, including this one, very much more). Approximately 22 million houses were worth less than $100,000, 22 million between $100,000 and $200,000, 12 million $200,000 to $300,000 and 19 million more than $300,000.

The Federal Reserve Board Flow of Funds Accounts of the US (Table B100, line 4, Real Estate owned by Households) estimates that total household real estate was worth $18,700 billion in 2005 (and $20,150 billion in fourth quarter of 2007, the latest data); allowing for slight differences in measurement, the average home value in 2005 was around $250,000, up to around $270,000 in 2007.

For comparison, US GDP (see table 9 of the latest GDP report here) was $12,430 billion in 2005 (and $14,070 billion in the fourth quarter of 2007), meaning that the value of private homes is around 1.4 to 1.5 times the annual GDP of the country. I am never quite sure why this particular comparison fascinates so many market analysts, because it is very difficult for me to understand how to compare the value of a long-lived asset (like a house) to the amount of income generated in a country in a year.

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