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September 4, 2007
Mortgage Debt vs Salaries and Wages
As for the commentary, I think the chart speaks for itself. Further, I think it has a very disturbing thing to say.
Here's the update.
The party ended at 180% in 2006.
As a side note, the salaries and wages data comes directly from the IRS and only includes those who filed an income tax return.
In 2007, 121 million filed with salaries and wages. Of those...
20.4% of all salaries and wages came from those earning less than $40,000. 55.8% of all filers fell into this group and they averaged just $17,658.
Can you spot the potential real estate problem? 55.8%!
20.4% of all salaries and wages also came from those earning $200,000 or more. 3.2% of all filers fell into this group and they averaged $309,478.
Source Data:
SOI Tax Stats
FRB: Flow of Funds
8 comments:
Nice update. Another data point that is hard to explain away as "temporary" or "not important".
Stag,
It looks to me like all that "potential" energy is about to be CONverted into kinetic energy.
GYSC & mab,
You are both going to LOVE my next post! Plenty of kinetic energy potential!
needs to be scaled by mortgage interest rates tho.
Houses at 4.5% for 30 will price differently than 8%
Troy,
That's true to some degree but how much?
The "half the rate" "double the price" game does have its limits.
That said, I did do a simulation on my own that based housing prices solely on "what do you want your payments to be" pricing.
You might find that interesting.
Housing Price Simulation
^ great charts.
My scratch home buying spreadsheet tells me that a $300,000 house costs $2000/mo @ 8% (PITI less the P).
This falls to $1450/mo at 4.5% and $1200 at 3%.
Normalizing to actual cash outgo of $2300/mo, we get:
$300,000 at 8%, $375,000 at 4.5%, and $410,000 at 3%.
Plus the secret sauce of the bubble years was buyers able to sidestep DTI limits with SISA, teaser rates, and negative-am.
Troy,
Heaven help us all if interest rates ever decide to move back up. I can't even begin to imagine the pain that 10% interest rates would do.
Fortunately, I'm not predicting that. At least not anytime soon.
Very cool. Thanks
-jus me
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