The housing collapse was by far the worst villain, accounting for three-quarters of the loss in net worth, according to the New York Times.
For homeowners in areas hit hardest by the housing crisis, the Fed's numbers are even more crushing.
In the West and South, families' median income is down about 10 percent from 2007, fueling the nation's overall 7.7 percent national decline. Median income in the Northeast and Midwest was fairly stable. (All figures come from the Fed's once-every-three-years Survey of Consumer Finances -- the link leads to its 80-page PDF. Its most recent research, released Monday, is from 2010.)
And whereas families' median net worth nationwide was down a "mere" 39 percent from 2007, it plummeted even more vertiginously, 54 percent, for families headed by someone 35 to 44 years old (a group for which housing is an especially large share of assets). In the hard-hit West, families' net worth plunged 55 percent.
Homeownership continues to decline, too, after peaking in 2004 at 69.1 percent. The rate is now 67.3 percent, the same as it was in 2001.
Perhaps more ominously for the housing market's future, an all-time-low proportion of families report saving money in the previous year. And of the families that are saving, a shrinking fraction cites a home purchase as the reason for doing so: 3 percent, compared with 5 percent in 2007. The survey also reports the first drop since at least 1989 in families with mortgages, home equity lines of credit (HELOCs) or other debt secured by a primary residence.
In the face of numbers like these, it's hard to be optimistic about the housing market. Then again, as Warren Buffett advises, "Be fearful when others are greedy, and be greedy when others are fearful." Which will you be?