Foreclose on Foreclosure
— Falling incomes vs. % left per month for mortgage payments
The higher debt-to-income ratios are a function of the diminished income levels of many homeowners since the economic downturn, said Nicolas P. Retsinas, a senior lecturer in real estate at Harvard Business School and one of the authors of the report.
The real median household income in 2008 — the latest year for which census data is available — was $50,303, which represents a 3.5 percent drop from $52,113 in 2007. In keeping with lenders’ 36 percent debt-to-income limit, households in this category had $1,509.09 available for monthly housing expenses, $54.30 less than in 2007. [NYT 9]
— Your World in Charts: Debtor Nation [Klein, 05-29-2009]
This comes via Federal Reserve Bank of San Francisco economists Reuven Glick and Kevin Lansing’s excitedly named paper, “U.S. Household Deleveraging and Future Consumption Growth.”
Not good. The authors estimate that getting our debt-to-income ratio down to a more sustainable 100 percent would require the household saving rate to rise from about 4 percent currently to 10 percent by the end of 2018. This would, in turn, slow economic growth by a bit less than one percentage point per year. I say again, not good.
— Underemployment multiplier to income
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