Chart of the Week: AnnualGrowth: Mortgage Debt, Real Estate, Owner Equit

The chart below depicts annual growth in mortgage debt as
well as real estate assets, and on the right axis shows owners’ equity as a
percent of real estate assets.
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Annual Growth: Mortgage Debt, Real Estate, Owner Equity
click for larger chart

Mort_debt_real_estate_owners_equity

Source: Barrons’ Econoday

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Since 1980, this ratio has dropped significantly. As debt
has risen, owners equity has dropped – despite the increase in Real Estate
Values. Barron’s states this means that “consumers have used their wealth to
pay for the spending spree of the past several years.” This shows how leveraged
the economy has become. Those “counting on a continuation of the boom in real
estate prices continuing may be in for a disappointment.”

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What's been said:

Discussions found on the web:
  1. None of Your Business commented on Apr 11

    Housing Bubble – Chart

    Yet more graphic evidence of the coming burst of the housing bubble. This chart shows the average home owner having more debt and less equity even though real estate prices have risen significantly. A great quote from the site:

    Those “counting on…

  2. john brown commented on Apr 11

    It’s pure chutzpa that financial wizzes wring their hands because the simple-minded little people are twigging to the financial tools of the trade — leverage. With rocket science bravado, those brave lads of the diode screen have created a whole unregulated, unmeasured, unmeasurable and uncontrollable universe of financial derivatives which swamp the values of whole governments, yet when Mom and Dad tap into a bit of their wealth, and a bit more as they learn the game and how its played, the scientists bellow that Mom and Pop are going to ruin the universe playing around with their houses. I don’t think we can jump to conclusions about the growth of financial methods without considering the growth in the financial education of the participants. It may not be as dismal as presumed or portrayed.

  3. Fester’s Place commented on Apr 12

    Squeeze Play

    An iron triangle is being produced for the asset led recovery that we have experienced over the past couple of years to be broken against it. Traditionally Americans have moved further away from their employment locations in order to gain access to m…

  4. Debra Riley commented on Oct 17

    326145: Hey, does anyone know where I can find a list of gas stations with low prices in my area?

  5. df commented on Oct 30

    Piling up debt, is the same as building a new tower of Babel.
    Capitalism is hoping to reach Heaven (Weapons, low wages and no tax for wealthy people) through ever increased piles of debt.

    The tower of Babel fell.

  6. df commented on Oct 30

    Piling up debt, is the same as building a new tower of Babel.
    Capitalism is hoping to reach Heaven (Weapons, low wages and no tax for wealthy people) through ever increased piles of debt.

    The tower of Babel fell.

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