The mass-affluent, about 33 million households that have investable assets between $100,000 and $1 million, are likely to be squeezed significantly as the real estate market deflates. This group has 37% of their total assets tied up in real estate (23% in principal residences, 14% in investment real estate), according to a new report, “2005 Mass Affluent Investor,” from Spectrem Group.
It’s not surprising that this compares with a much lower total real estate exposure of 21% (13% principal residence, 8% investment real estate) for those with investable assets of $1 million or more.
No doubt, some of those mass affluent are the ones who were sold the interest-only mortgages. That's why their financial squeeze is only just beginning as interest rates rise.