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Does this mean the bottom 50% in the US are in the red?

Yes. Student loans, car loans, credit cards, payday loans, and mortgages make it incredibly tough to get a positive net worth nowadays.

Combine the expectation a better tomorrow(the American Dream) with a declining middle class, and massive amounts of debt is what results.

Mortgages are offset in net worth calculations by the value of the home, so they shouldn't have much of an effect on net worth unless the house has lost significant value or you overpaid for it. Similar situation with car loans, although cars lost a lot of value immediately, so they could have some effect.

Right, but home values _can_ change drastically, and did at the time that the US lower class experienced a negative net worth, during the '08 financial crisis.

Loans aren't free. Including interest, the cost of a loan can easily exceed the value of the thing being purchased with it (in fact, it initially almost always does). Stagnant housing markets and new vehicles will both add to a person's overall debt, even when accounting for the market value of the asset.

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