Re: Re: RE: Re: How Much Housing Credit Is Too Much?

[Finmktctr]

H'hold Mortgage Debt as Pct. of Disposable Personal Income:
Q3 2002: 74.2%
2001: 72.8%
2000: 68.8%
1999: 68.4%
1998: 65.4%
1997: 64.0%
SOURCE: Flow of Funds Q3 2002

Mortgage debt-service burden for Q4 2001-Q3 2002 ties the burden recorded in 
Q4 1990-Q3 1991 as the highest ever for four consecutive quarters, according 
to the Fed 
(http://www.federalreserve.gov/releases/housedebt/default.htm). 

While the burden increases, despite refis and low real rates:
H'hold Net Worth as Pct. of Disposable Personal Income:
Q3 2002: 486%
2001: 556%
2000: 589%
1999: 639%
1998: 588%
1997: 567%
SOURCE: Flow of Funds Q3 2002

And, as Jane points out, only inflated res. r.e. prices have cushioned 
h'holds against deeper absolute and relative (to income) losses in net worth.

Tom Schlesinger

Re: Re: RE: Re: How Much Housing Credit Is Too Much?

[Doug Henwood]

Michael Perelman wrote:

We should ask Doug H., who is now on the radio.



Debt service % of DPI

 total   consumer mortgage

01q1 14.05 7.91 6.14
01q2 14.16 7.96 6.20
01q3 13.94 7.79 6.16
01q4 14.39 8.05 6.35
02q1 14.09 7.88 6.22
02q2 14.03 7.82 6.20
02q3 14.00 7.76 6.24

Re: Re: Re: RE: Re: How Much Housing Credit Is Too Much?

[Michael Perelman]

The WSJ has been having pieces about the incentives sellers of high end
houses are having to give.  One of the best indicators of an impending
bubble burst would be the length of time required for sell a house.
During the high bubble in San Francsico, houses would sell at a premium as
soon as they were listed.  I don't think anything like that is happening
now.

So even if prices are holding, you can have considerable weakness in the
market. 

 -- 
Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 530-898-5321
E-Mail [EMAIL PROTECTED]

RE: Re: Re: Re: RE: Re: How Much Housing Credit Is Too Much?

[Brown, Martin - ARP (NIH/NCI)]

The Washington Post reported a while ago that there has been a slump in the
market for $1 million plus McMansions in the DC area.

On a another topic, Jim Devine turned out to be wrong about Doonesbury on
Iraq.  If you followed the episodes for a few more days it turns out that
the Iraqi plant manager is telling the truth, that the radioactivity in the
yougurt (I think that's what it was) comes from milk from cows eating grass
contaminated by radioactive contamination from the Gulf war.



-Original Message-
From: Michael Perelman [mailto:[EMAIL PROTECTED]]
Sent: Thursday, December 19, 2002 11:51 PM
To: [EMAIL PROTECTED]
Subject: [PEN-L:33256] Re: Re: Re: RE: Re: How Much Housing Credit Is
Too Much?


The WSJ has been having pieces about the incentives sellers of high end
houses are having to give.  One of the best indicators of an impending
bubble burst would be the length of time required for sell a house.
During the high bubble in San Francsico, houses would sell at a premium as
soon as they were listed.  I don't think anything like that is happening
now.

So even if prices are holding, you can have considerable weakness in the
market. 

 -- 
Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 530-898-5321
E-Mail [EMAIL PROTECTED]

Re: Re: Re: Re: RE: Re: How Much Housing Credit Is Too Much?

[Finmktctr]

Very soothing.  AG's 12/19 speech actually contains several rounds of 
Greenspan-D'Arista Smackdown, including his response to the idea of using 
regulatory tools to slow the credit expansions that breed bubbles.  I can't 
remember any time in recent years when Father Greenspan has been quite so 
defensive in public (first the Jax Hole speech, now this) -- or when the Fed 
has seemed so Out There in its reassurances (in announcing its 50 bp cut last 
month, the FOMC claimed that "with this action...the risks are balanced").
TS

In a message dated 12/20/2002 12:55:25 PM Eastern Standard Time, 
[EMAIL PROTECTED] writes:

<< [EMAIL PROTECTED] wrote:
 
 >Mortgage debt-service burden for Q4 2001-Q3 2002 ties the burden recorded in
 >Q4 1990-Q3 1991 as the highest ever for four consecutive quarters
 
 This just in from St Alan - don't worry about it!
 
 
 
 >A full enumeration of the caveats surrounding the economic outlook 
 >would, as usual, be lengthy. But often-cited concerns about the 
 >levels of debt and debt-servicing costs of households and firms 
 >appear a bit stretched. The combination of household mortgage and 
 >consumer debt as a share of disposable income has moved up to a 
 >historically high level. But the upward trend in the series 
 >reflects, in part, financial innovations that have increased access 
 >to credit markets for many households. These innovations include the 
 >development of a deep secondary market for home mortgages, along 
 >with the advent of credit scoring and automated underwriting models 
 >that have enhanced the ability of loan officers and credit card 
 >companies to identify good credit risks. These innovations lower the 
 >risk level of any given amount of debt.
 >
 >To be sure, the mortgage debt of homeowners relative to their income 
 >is high by historical norms. But, as a consequence of low interest 
 >rates, the servicing requirement for that debt relative to 
 >homeowners' income is roughly in line with the historical average. 
 >Moreover, owing to continued large gains in residential real estate 
 >values, equity in homes has continued to rise despite very large 
 >debt-financed extractions. Adding in the fixed costs associated with 
 >other financial obligations, such as rental payments of tenants, 
 >consumer installment credit, and auto leases, the total servicing 
 >costs faced by households relative to their income appears somewhat 
 >elevated compared with longer-run averages. But arguably they are 
 >not a significant cause for concern.
 >
 >Some strain from corporate debt burdens became evident as rates of 
 >return on capital projects financed with debt fell short of 
 >expectations over the past several years. While overall debt has not 
 >been paid down, corporations have significantly increased holdings 
 >of cash and have reduced their near-term debt obligations by issuing 
 >bonds to pay down commercial paper and bank loans.
 
 
  >>

RE: RE: Re: Re: Re: RE: Re: How Much Housing Credit Is Too Much?

[Devine, James]

Title: RE: [PEN-L:33262] RE: Re: Re: Re: RE: Re: How Much Housing Credit Is Too Much?





Martin writes:>
On a another topic, Jim Devine turned out to be wrong about Doonesbury
on Iraq.  If you followed the episodes for a few more days it turns out
that the Iraqi plant manager is telling the truth, that the radioactivity in the yougurt (I think that's what it was) comes from milk from cows eating grass contaminated by radioactive contamination from the Gulf war.<

it's the first time I've been wrong this year!
Jim