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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Tradelite who wrote (63498)10/8/2006 9:22:17 AM
From: Dan3Read Replies (1) of 306849
 
Re: many real estate bears ROUTINELY assume people putting money into real estate don't have any money (or brains) to back up their purchases.

I think there are a lot of families out there that don't have enough money (or brains) to back up their shoe purchases, never mind their home purchases.

Consumer credit is at $2,352 Billion and rising fast. There are about 110 million households and I'll make a complete WAG (please correct if possible) that ~half those households don't have revolving debt. Certainly my own doesn't, I'd imagine most readers of this thread don't, and there are a great many households made up of retired persons who'd better not have any. As household wealth has become more polarized in the US, there are also a growing number of "rich" households that have no revolving debt. Note that this is all before mortgage debt - this is what households owe on their credit cards and car loans. A lot of this debt is at high and variable interest rates.

So that works out to an average of about $43,000 in revolving debt for US households - nearly equal to the median household annual gross household income.

You're telling me that all but an insignificant percentage of this population is following a carefully reviewed risk-aware plan for its finances? Because if a significant percentage (say, 5%) of this population is heading towards a financial brick wall, that's could lead to a macro mess.
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