Study finds more millionaires in Bay Area
Study finds more millionaires in Bay Area
(07-15) 18:29 PDT — Last year, the S&P index dropped nearly 40 percent, regional home prices fell by almost half and the state unemployment rate zoomed to the brink of double digits, so obviously the number of Bay Area millionaires … climbed?Believe it or not, that’s the conclusion of a report released Wednesday by Merrill Lynch. Several economists, however, quickly placed themselves in the “not” camp.
The World Wealth Report, produced by Merrill and market research firm Claritas, found that the number of millionaire households across the nine-county Bay Area climbed to 136,120 last year, up 10.2 percent from 123,621 in 2007.
In fact, all three regions surveyed in the Golden State (Los Angeles, San Diego and San Francisco areas) increased in wealth last year, in sharp contrast to national and global trends, said Mike Riherd, senior vice president of investments in the Walnut Creek office of Merrill.
[snip]
The report predicts that the number of millionaires in the Bay Area will increase by 20 percent by 2013. The wealth of millionaires worldwide will swell by 48 percent during that time, from $32.8 trillion to $48.5 trillion, it said.
The study defined millionaires as having $1 million worth of “investable assets,” which exclude things like their primary residence, collectibles and consumables.
Congrats Bay Area! With all these millionaires, I know we are set to blast off for returning to the normal 10% year over year appreciation for houses in the Real Bay Area.
Great work everyone!
July 17th, 2009 at 7:37 am
Perhaps the study meant the number of people with million dollar debt increased… debt does not equal wealth.
July 17th, 2009 at 9:57 am
Check this out:
http://news.yahoo.com/s/ap/20090717/ap_on_bi_go_ec_fi/us_state_unemployment
The Federal Reserve this week projected that the national unemployment rate, currently at a 26-year high of 9.5 percent, will pass 10 percent by the end of the year. Most Fed policymakers said it could take “five or six years” for the economy and the labor market to get back on a path of long-term health.
Um, than how can we be at the bottom?
July 17th, 2009 at 10:45 am
It sounds like the study is counting net worth, not just liquid assets, you would think the numbers would be very high then since you get to combine 401k, home equity and other things.
Intersting how burbed removed the parts of the article were people where disagreing with the results saying that home equity and stock market losses should’ve made the numbers decrease.
July 17th, 2009 at 10:47 am
The study did not include home equity…it apparently was cash, stocks/bonds, 401(k), etc.
July 17th, 2009 at 10:50 am
What a BS study: “The study defined millionaires as having $1 million worth of “investable assets,””
What the hell?? This is quite possibly the most meaningless study I have ever seen. Did they subtract what people actaully owe on their homes? Obviously not. Not only that, the bay area is still playing ‘let’s pretend’ in terms of their property values…
Fools.
July 17th, 2009 at 11:12 am
#5, home debt does not matter because many states are non-recourse, so your financial assets can’t be harmed regardless of what you owe on your house.
July 17th, 2009 at 11:14 am
You’re saying that because it is a non-recourse loan, you do not calculate it on your balance sheet?
Wrong. Try again.
July 17th, 2009 at 11:31 am
No, I am saying if you have $1 million in ‘investable assets’, and you default on your house debt in a non-recourse state, you will still have your $1 million.
July 17th, 2009 at 11:33 am
More good news:
http://www.latimes.com/business/la-fi-caljobs18-2009jul18,0,6076386.story
California unemployment rate is now 11.6%. Clearly, we are well on our way to a recovery. Buy now before its too late!
July 17th, 2009 at 11:41 am
“No, I am saying if you have $1 million in ‘investable assets’, and you default on your house debt in a non-recourse state, you will still have your $1 million.”
That is not relevant. What matters is assets minus liabilities.
July 17th, 2009 at 11:56 am
That is not relevant. What matters is assets minus liabilities.
then you would have to count the illiquid assets (like home equity) they excluded, no? a cool mil ready to invest seems just as good to me as any other arbitrary definition.
July 17th, 2009 at 12:00 pm
Speaking of non-recourse debt, it’ll be curious to see if any of these banks ever decide to come after people on their recourse debt. Only money used to purchase your residence is non-recourse. Refi money, HELOCs, former purchase money on a home that is now being rented out, etc. is all recourse but banks rarely come after the borrower, probably because they are too busy right now. Probably also because it would force the owner to declare bankruptcy.
However, it’ll be interesting if banks decide to in a year or two that they want to pursue borrowers on recourse debt. A lot of people who think they’re free because their property was foreclosed are really not. The bank could decide it wants its money after all. I doubt it’ll happen, but it could.
July 17th, 2009 at 12:15 pm
“then you would have to count the illiquid assets (like home equity) they excluded, no?”
Of course…
July 17th, 2009 at 12:32 pm
R,
My suspicion as to whether or not the banks go after recourse will vary from situation to situation.
In the subprime realm, I doubt if they will decide to go after that pink elephant. However, in the Alt-A and prime categories, a lot of those folks will have meat that can be picked.
Take for example a lot of the six figure code monkeys in Silicon Valley that used similar I/O and option-ARM loan instruments during the run up. If these folks start walking away from some of their obligations, they will likely still be commanding premium sized paychecks that the banks can go after. So that will be an interesting scenario.
July 17th, 2009 at 1:46 pm
So that will be an interesting scenario.
Don’t you mean that would be a satisfying scenario?
July 17th, 2009 at 2:35 pm
Don’t you mean that would be a satisfying scenario?
Well, that too.
I got dibs on Real Excreter’s flat screen when it goes up for public auction!
July 17th, 2009 at 2:53 pm
Although it explains why so many flat screens are selling in craiglist, but RealEstater never had a flat screen because he is priced out for real estate investment after procrastinating for more than a year. He has a property what he calls investment “equivalent of 3 median priced properties”, but unfortunately all the renters (his trophy wife and children) don’t pay him rent equivalent to flat screen.
July 17th, 2009 at 4:00 pm
Take for example a lot of the six figure code monkeys in Silicon Valley that used similar I/O and option-ARM loan instruments during the run up. If these folks start walking away from some of their obligations, they will likely still be commanding premium sized paychecks that the banks can go after.
Hm, doesn’t that defeat the point of non-recourse?
July 17th, 2009 at 4:00 pm
I’d find more satisfaction from seeing the bank’s executives and shareholders wiped out, but that sure as hell ain’t going to happen.
How about for every foreclosure a lender drops within a 2 mile radius of your underwater home, 10% of that recourse debt is forgiven when you walk.
July 17th, 2009 at 4:43 pm
“Hm, doesn’t that defeat the point of non-recourse?”
No, CA’s non-recourse rule is just designed to protect buyers in the purchase of their primary residence. It is not intended to allow investors, speculators, or idiots that choose to use their home as an ATM to skate on their loan obligations when they decide repaying their debt is no longer convenient or conducive to their lifestyle.
July 17th, 2009 at 4:47 pm
If all real estate debt was non-recourse, that would be a sweet ATM. Why wouldn’t one just take the maximum amount of cash out and walk-away?
July 17th, 2009 at 5:43 pm
Hm, doesn’t that defeat the point of non-recourse?
It just depends whether they’ve owned long enough to refi or take out a HELOC. I’m sure there are plenty of fools that the banks could chase after.