The Housing Bubble and Mortgage Debt as a % of GDP

by Calculated Threat on 1/16/2023 10:38:00 AM

As we speak, within the Calculated Threat Actual Property Publication: The Housing Bubble and Mortgage Debt as a Percent of GDP

A short excerpt:

In a 2005 post, I included a graph of family mortgage debt as a % of GDP. A number of readers requested if I might replace the graph.

First, from February 2005 (18 years in the past!):

The next chart reveals family mortgage debt as a % of GDP. Though mortgage debt has been rising for years, the final 4 years have seen an amazing enhance in debt. Final 12 months alone mortgage debt elevated near $800 Billion – virtually 7% of GDP. …

Many owners have refinanced their houses, in essence utilizing their houses as an ATM.It would not take a RE bust to affect the final economic system. Only a slowdown in each quantity (to affect employment) and in costs (to decelerate borrowing) would possibly push the final economic system into recession. An precise bust, particularly with all the intensive sub-prime lending, would possibly trigger a major problem.

And a major problem is what occurred!