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

Monday, April 11, 2005 | 04:09 PM

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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Quote of the Day:

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Monday, April 11, 2005 | 04:09 PM | Permalink | Comments (5) | TrackBack (2)
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Listed below are links to weblogs that reference Chart of the Week: AnnualGrowth: Mortgage Debt, Real Estate, Owner Equit:

» Housing Bubble - Chart from None of Your Business
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... [Read More]

Tracked on Apr 11, 2005 5:12:08 PM

» Squeeze Play from Fester's Place
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... [Read More]

Tracked on Apr 12, 2005 6:47:56 AM

Comments

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.

Posted by: john brown | Apr 11, 2005 10:04:11 PM

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