by Calculated Risk on 12/09/2021 12:55:00 PM
The Federal Reserve released the Q3 2021 Flow of Funds report today: Financial Accounts of the United States.
Household debt increased 6.2 percent at an annual rate in the third quarter of 2021. Consumer credit grew at an annual rate of 5.3 percent, while mortgage debt (excluding charge-offs) grew at an annual rate of 7.8 percent.
The first graph shows Households and Nonprofit net worth as a percent of GDP.
Household percent equity (as measured by the Fed) collapsed when house prices fell sharply in 2007 and 2008.
In Q3 2021, household percent equity (of household real estate) was at 68.8% – up from 68.3% in Q2. This is the highest percent equity since the 1980s.
Note: about 30.3% of owner occupied households had no mortgage debt as of April 2010. So, the approximately 50+ million households with mortgages have less than 67.7% equity – and about 470 thousand homeowners still have negative equity.
Mortgage debt increased by $230 billion in Q3. This is the largest quarterly increase in mortgage debt since 2006.
Mortgage debt is up $800 billion from the peak during the housing bubble, but, as a percent of GDP is at 49.6% – up slightly from Q2 – and down from a peak of 73.3% of GDP during the housing bubble.
The value of real estate, as a percent of GDP, increased in Q3, and is well above the average of the last 30 years.