{"id":278953,"date":"2021-06-19T18:26:00","date_gmt":"2021-06-19T15:26:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/one-chart-that-shows-housing-isnt-heading-for-another-disaster\/"},"modified":"2021-06-19T18:26:00","modified_gmt":"2021-06-19T15:26:00","slug":"one-chart-that-shows-housing-isnt-heading-for-another-disaster","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/one-chart-that-shows-housing-isnt-heading-for-another-disaster\/","title":{"rendered":"#\n  One chart that shows housing isn\u2019t heading for another disaster"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_89 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6ae2898616a5b\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6ae2898616a5b\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/one-chart-that-shows-housing-isnt-heading-for-another-disaster\/#Homeowners_equity_is_the_highest_in_31_years_providing_a_cushion_in_case_prices_flatten_or_fall\" >Homeowners\u2019 equity is the highest in 31 years, providing a cushion in case prices flatten or fall<\/a><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/one-chart-that-shows-housing-isnt-heading-for-another-disaster\/#High_levels_of_equity\" >High levels of equity<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/one-chart-that-shows-housing-isnt-heading-for-another-disaster\/#Rex_Nutting\" >Rex Nutting<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong>#<br \/>\n  One chart that shows housing isn\u2019t heading for another disaster<br \/>\n<\/strong>&#8221;<\/p>\n<h2 class=\"article__subhead\" itemprop=\"alternativeHeadline\"><span class=\"ez-toc-section\" id=\"Homeowners_equity_is_the_highest_in_31_years_providing_a_cushion_in_case_prices_flatten_or_fall\"><\/span>\n  Homeowners\u2019 equity is the highest in 31 years, providing a cushion in case prices flatten or fall<br \/>\n<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><\/p>\n<div class=\"column column--full article__content\">\n<div class=\"article__side\">\n<div class=\"container--sticky not-active\">\n<div id=\"cx-next\">\n              <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<div id=\"js-article__body\" class=\"article__body article-wrap at16-col16 barrons-article-wrap\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0000303922\">\n<div class=\"barrons-article-ad-wrapper\">\n<div data-track=\"barrons-article-ad-wrap\" class=\"barrons-article-ad sticky_item\">\n<div class=\"barrons-main-article-ad-target sticky_target body_ad\" aria-hidden=\"true\"><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p>       The Federal Reserve released mountains of data on the financial health of American families and companies on Thursday. The chart, above, from <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.federalreserve.gov\/releases\/z1\/default.htm\" class=\"icon none\">the financial accounts of the U.S. <\/a>shows that\u00a0homeowners\u2019 equity in their housing rose to 67.3%, the highest since 1989. Or put another way, leverage \u2014 debt-to-value \u2014 in the housing market is very low.\u00a0<\/p>\n<p> Contrast that with the situation in 2005 through\u00a02009, when leverage led to the worst global recession in 80 years as mortgage debt grew faster than home prices, fueling an unsustainable bubble that was destined to pop when prices stopped rising.<\/p>\n<div class=\"paywall\">\n       Back then, leverage exploded with the proliferation of unwise mortgages (including HELOCs, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.investopedia.com\/terms\/n\/ninja-loan.asp\" class=\"icon none\">NINJA loans<\/a>, balloon payments, and payments that didn\u2019t even cover the interest costs). <\/p>\n<p>Many buyers were pure speculators, counting on house prices to rise forever, allowing them to find a \u201cgreater fool\u201d who would bail them out of their ill-advised debt by buying their overpriced home before the music stopped. <\/p>\n<p>Of course, the merry-go-round had to stop at some point. When prices started to fall, many homeowners went quickly underwater on their mortgage, especially if their monthly payment increased after initial teaser rates expired.  <\/p>\n<p>This was the essence of the housing bubble that popped before the Great Recession: Owners were forced to sell at a loss because they couldn\u2019t make their monthly payments even as housing values deflated. Forced sales drove prices even lower in a vicious spiral.\u00a0<\/p>\n<p>Ultimately, national home prices plunged 28% from peak to trough, by far the worst drop since the Great Depression and making a mockery of the conventional wisdom of the time that home prices never decline. (Previously, the worst post-depression decline had been a 3% drop during the savings &amp; loan crisis of 1990.) <\/p>\n<h6><span class=\"ez-toc-section\" id=\"High_levels_of_equity\"><\/span>High levels of equity<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>Today, it\u2019s much different. Over the past six years since mortgage debt began to grow again, debt has been increasing only about one-third as fast as home values. <\/p>\n<p>High levels of equity mean that, even if housing prices were to flatten or fall slightly, very few homeowners would be forced to sell at a loss. Most loans now have fixed interest rates, so monthly payments wouldn\u2019t rise. Most homeowners could sit it out in comfort (as long as their incomes held up, that is).<\/p>\n<p>If prices were to flatten or fall slightly, sales would dry up, but prices wouldn\u2019t be driven even lower by forced sales. That would mean that mortgages wouldn\u2019t default, and mortgage lenders wouldn\u2019t fail and bring down the global financial system.\u00a0<\/p>\n<p>Anyone who thinks home prices are destined to collapse in the next few years needs to show their work. What\u2019s the economic or financial mechanism that would drive homeowners to sell at a loss?<\/p><\/div>\n<\/div><\/div>\n<p><\/p>\n<div class=\"byline article__byline\">\n<p>      <span>By<\/span><\/p>\n<div class=\"author  hasMenu\" data-scrim='{\"type\":\"author\",\"header\":\"Rex Nutting\",\"subhead\":\"The Wall Street Journal\",\"list\":[]}' itemscope itemprop=\"author\" itemtype=\"http:\/\/schema.org\/Person\">\n<h4 itemprop=\"name\"><span class=\"ez-toc-section\" id=\"Rex_Nutting\"><\/span>Rex Nutting<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/p><\/div>\n<\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"http:\/\/www.marketwatch.com\/news\/story.asp?guid=%7B20C05575-04D4-B545-74A3-326E0C2CCB60%7D&#038;siteid=rss&#038;rss=1\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# One chart that shows housing isn\u2019t heading for another disaster &#8221; Homeowners\u2019 equity is the highest in 31 years, providing a cushion in case prices flatten or fall The Federal Reserve released mountains of data on the financial health of American families and companies on Thursday. The chart, above, from the financial accounts of&#8230;<\/p>\n","protected":false},"author":1,"featured_media":278954,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[],"class_list":["post-278953","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/278953","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=278953"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/278953\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/278954"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=278953"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=278953"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=278953"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}