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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Amy J who wrote (11448)	7/2/2003 1:31:28 PM
From: GraceZ	Read Replies (1) \| Respond to of 306849

You have to remember these numbers represent macro numbers, in other words they take all the mortgage debt payments against all households, all the consumer debt payments against all households. If you look at the explanation below you'll see the difficulties in estimating the consumer debt because they assume people are paying the minimum payment on a balance. federalreserve.gov The reason this seems low to you is because it is in comparison to where you live. California is one of the most expensive places to live in the country and people there have adapted themselves to living with an extremely high level of debt in comparison to people around the country. Two of the houses I own have mortgage payments that are both below $400/month and one is a 15 year. I had a woman who worked for me about five years ago, who made less than 20k a year, her mortgage payment (which she still has) is $149.00/month. None of these houses are in the slums, they just have really old mortgages on them and the houses were bought when the sale prices were far lower. I live in an area now where there are two kinds of homeowners, those who have owned their houses for over 30 years whose houses are completely paid off where the house sold for under 30k and those who bought in the last five-ten years where the houses sold for 300k to 600k and the owners have huge mortgages. The majority of the houses in my area have no mortgage at all, as do a little over a third of the houses in the US. This kind of thing which exists in areas like mine all across the US makes the macro measurement appear quite a bit lower than your experience. I can honestly tell you that at the time when I bought those two houses with under $400/month mortgage payments, it seemed like an impossible amount and it was a large percentage of my income. If you stay in one place and continue paying down your mortgage, eventually it gets paid off....as long as you don't keep taking your equity back out or keep trading up and taking on another 30 year mortgage.

To: Amy J who wrote (11448)	7/2/2003 1:49:08 PM
From: bozwood	Read Replies (1) \| Respond to of 306849

I think Grace and Steve made a point about the data measuring the avg vs median, so that may be part of the issue. There may be a large # of people paying a larger % of disposable income, for instance, being off-set by one very high income individual. I agree it doesn't sound like a large % of income to be paying. I just try to look at that type of data on as long of a time period as possible and understand that there is some reason that in the past it was a much lower % than now, and that it has grown from there by what seems to be a significant amount. Hope that answers your question.