House Prices, Home Equity-Based Borrowing, and the U.S. Household Leverage Crisis

[Anonymous_IHB]

<A href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1397607">http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1397607</A>



"the average homeowner extracts 25 to 30 cents for every dollar increase in home equity"



"home equity-based borrowing is equal to 2.3% of GDP every year from 2002 to 2006"

 

[Geotpf_IHB]

[quote author="Anonymous" date=1242338442]<A href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1397607">http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1397607</A>



"the average homeowner extracts 25 to 30 cents for every dollar increase in home equity"



"home equity-based borrowing is equal to 2.3% of GDP every year from 2002 to 2006"</blockquote>


IR has mentioned this before. That 2.3% is never coming back, at least not any time soon. This will hurt the economy for quite some time.

 

[stepping_up_IHB]

and considering that 3% growth is deemed average for a developed economy sclerotic growth may become the norm. Unless of course there is a birth of a new industry, particularly new technology to drive growth. I'm hoping for the latter.



The thing that really saddens me about these figures is how much of that borrowed money was just squandered, particularly on useless crap from China that is now in some landfill somewhere or on a garbage barge back to China.

 

[freedomCM_IHB]

Ok, this has got to be the most sad mortgage record that I've seen.



Listing Information



* Conditions: In Foreclosure Process

* Conditions: Notice of Default

* Conditions: Short Sale/Subject to Lender Approval



Property History for 3158 Killarney Ln

Date Event Price Appreciation Source

May 14, 2009 Listed $350,000 -- SANDICOR #090028142

May 14, 2009 Listed $349,990 -- SoCalMLS #S574470

<strong>Aug 09, 1973 Sold $8,500 </strong> -- Public Records





<a href="http://www.redfin.com/CA/Costa-Mesa/3158-Killarney-Ln-92626/home/3715047">Sadness</a>

<img src="http://media.cdn-redfin.com/photo/46/bigphoto/470/S574470_0.jpg" alt="" />

 

[stepping_up_IHB]

[quote author="freedomCM" date=1242379338]Ok, this has got to be the most sad mortgage record that I've seen.



Listing Information



* Conditions: In Foreclosure Process

* Conditions: Notice of Default

* Conditions: Short Sale/Subject to Lender Approval



Property History for 3158 Killarney Ln

Date Event Price Appreciation Source

May 14, 2009 Listed $350,000 -- SANDICOR #090028142

May 14, 2009 Listed $349,990 -- SoCalMLS #S574470

<strong>Aug 09, 1973 Sold $8,500 </strong> -- Public Records





<a href="http://www.redfin.com/CA/Costa-Mesa/3158-Killarney-Ln-92626/home/3715047">Sadness</a>

<img src="http://media.cdn-redfin.com/photo/46/bigphoto/470/S574470_0.jpg" alt="" /></blockquote>


Are you sure there wasn't another sale in there? I mean, don't tell me that they heloc'd that much and only have an outdoor heating lantern to show for it. Not a dime on flooring, kitchen cabinets, etc? Something seems wrong.