If you're feeling a little short-changed lately, you're not alone. Between 2001 and 2004, Americans owed more money, and they earned less at their jobs. Yet, surprisingly, their net worth rose one and a half percent.

Is it magic? Accounting sleight of hand? No. Net worth rose primarily because of home ownership and an increase in housing prices, according to a new survey by the Federal Reserve.

While the median income for families rose to $43,200, median wages fell 6.2 percent. Seven percent of families said they spent more than they earned, while 16 percent said they spent what they made. Thirty-six percent said they saved some income at the end of the year, and over 40 percent said they saved regularly.

Where they came out ahead was in their asset holdings. Nearly 98 percent of the families surveyed owned assets, either financial assets such as stocks and bonds, or non-financial assets such as homes.

The median value of non-financial assets (houses) rose over 22 percent to nearly $173,000, while stocks and bond investments fell by nearly the same percentage to $23,000. It was the first time the Fed saw a decline in stock ownership since 1989, which means that more families were placing their money in homes than the stock market.

That explains the level of debt going up. With less income, and less opportunity to invest, families relied on low interest rates to buy what they needed, increasing their total debt, including mortgage debt, to a median of $55,300, a 33 percent increase in debt since 2001. Over 75 percent of families surveyed had debt, with the median level of mortgage debt at $95,000.

One reason families can take on more debt is because interest rates have hovered at near 30-year lows since 2002. Every year, for the past five years, home prices and home sales volume have reached record levels.

Realty Times believes that people are putting their money into homes because a house is an investment that is rewarding on many levels, not just financial. A home is where you gather with your family, entertain your friends, and retreat after a long, hard day at work. There isn't an investment anywhere that can compete with that.

While some have predicted a housing slowdown for 2006, Realty Times reminds everyone that even a slight pullback will still reach the record-breaking levels of 2003 or 04, or perhaps 2005.

Published: February 28, 2006

Use of this article without permission is a violation of federal copyright laws.