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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: bozwood who wrote (11427)7/2/2003 11:58:35 AM
From: Amy JRead Replies (2) of 306849
 
Hi bozwood,
How do you interpret this data, specifically:

What are they including in "consumer debt-service payments" - if a consumer pays off their credit card in full every month, is that still included as a debt-service payment (because it is essentially a 30-day loan) -or- are they only considering credit card payments on amounts past the 30-day loan period (after which point the interest charges kick in for consumers).

Also, 6.37% (for mortgage) of disposable personal income seems low, at least in Silicon Valley where (picking any random income that's high enough to make a point) $200,000 disposable income translates into $1061 monthly mortgage which wouldn't even buy you a condo here.

If the average consumer can have a place to live & eat for only 14% of their disposable income (assuming it's true this 7.63% consumer debt-service is the consumer's total monthly credit card expenses plus any remaining debt-balance beyond 30-days being serviced), why all the fuss about them overspending, since it appears a minority of their income is going to mortgage & total monthly credit card expenses & interest payments? But if they are spending so little of their disposable income for two of their major costs (food & mortgage), why aren't they saving more?

Household debt-service payments as a percentage of disposable personal income; seasonally adjusted

Quarter Total Consumer Mortgage
03q1 13.99 7.63 6.37

Regards,
Amy J
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