Fed Report: Housing Meltdown Hit Middle Class Hardest

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housing meltdown personal wealthA report recently released by the Federal Reserve offers new figures that capture the full scope of the housing bust's devastating impact on household wealth.

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."

See also:
How to Get Your Mortgage Above Water
Underwater Mortgages Keeping Housing Market Afloat?
Should Underwater Homeowners Just Walk Away?


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Best Beach Towns for Buying Foreclosures
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Fed Report: Housing Meltdown Hit Middle Class Hardest

Average sale price: $355,604
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The quintessential California beach town, Santa Cruz is located about 75 miles south of San Francisco. It is comfortably situated between thickly wooded mountains and clean sandy beaches. The Santa Cruz boardwalk entertains children and adults alike: It has an amusement park complete with roller coaster, arcades, mini-golf, bowling, shopping and outdoor concerts.

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The Town of Barnstable is comprised of several famous Cape Cod villages, including Hyannis. It's also close to the islands of Martha's Vineyard and Nantucket. Hyannis has a large natural harbor and is the largest recreational boating port on Cape Cod. The Kennedy Compound is also located in Barnstable, in the village of Hyannis Port.

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Honolulu, Hawaii's capital located on the island of Oahu, offers top quality surfing, famous Waikiki Beach and pristine hiking trails. It also has an exemplary public transportation system, which connects its world class shops and restaurants to its relaxing beaches.

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Since Las Vegas isn't on the beach, your best bet for being able to gamble and ride waves is Atlantic City, N.J. Besides its familiar street names (see: Monopoly), the city has a world famous boardwalk lined with casinos, shops, restaurants and an amusement park.

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Hilton Head Island is home to three championship golf courses, including the site of the Verizon Heritage PGA Tour Golf Tournament. It also features award-winning restaurants and shopping, as well as an array of outdoor recreational activities. Here you can enjoy scuba diving, water skiing, fishing charters, cruises and dolphin-watching.

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Charleston prides itself on its beach-side golf courses, one of which was home to the 2012 PGA Championship. The city also comes with a rich history of plantations and historic homes and buildings.

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After a long day enjoying the sunny beaches or hiking in majestic mountains, spend the night tasting some of the finest California wines in Santa Barbara's wine country. The city also has a temperate climate year-round, so it is a great place to live if you want to avoid snowy winters and scorching summers.

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Texas has beaches, too! Miles of the Gulf of Mexico shoreline extend across Corpus Christi, where there are plenty of sites and attractions. Visit the U.S.S. Lexington Museum or the Texas State Aquarium. For more outdoor adventures, check out Mustang Island State Park, where you can enjoy fishing, bonfires, kayaking and camping.

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Another outdoorsy paradise, Vero Beach offers -- not surprisingly -- miles of beaches and is home to the Pelican Island National Wildlife Reserve. Enjoy airboat tours, scuba diving, snorkeling and many other water and beach sports.

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Fed Reports How Much Recession Shrank US Wealth
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