by Calculated Risk on 2/17/2020 10:27:00 AM
Three years ago, on Presidents’ Day, I excerpted from a post I wrote in February 2005 (yes, 15 years ago).
In that 2005 post, I included a graph of household mortgage debt as a percent of GDP. Several readers asked if I could update the graph.
First, from 2005:
The following chart shows household mortgage debt as a % of GDP. Although mortgage debt has been increasing for years, the last four years have seen a tremendous increase in debt. Last year alone mortgage debt increased close to $800 Billion – almost 7% of GDP. …
It wouldn’t take a RE bust to impact the general economy. Just a slowdown in both volume (to impact employment) and in prices (to slow down borrowing) might push the general economy into recession. An actual bust, especially with all of the extensive sub-prime lending, might cause a serious problem.
CR Note: And a serious problem is what happened!
The “bubble” is pretty obvious on this graph, and the sharp increase in mortgage debt was one of the warning signs.