The Slow Process of De-leveraging Household Mortgage Debt

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Written By H. Pike Oliver

A post at the Calculated Risk blog includes the chart copied below which shows that while home prices have declined as a percent of gross development product, mortgage balances still have a long way to go.

As Jacob Goldstein pointed out in an NPR Planet Money post on this topic on June 9, 2011, a 2010 study found that de-leveraging often takes as long as the credit boom that preceded it. That study, by the husband and wife economic team of Carmen and Vicent Reinhart, concludes that the recent mortgage credit boom lasted for about a decade, and ended in 2007. If de-leveraging takes as long as leveraging up did, it could take until 2016 before household mortgage debt falls back in line with pre-bubble residential real estate values.

H. Pike Oliver

H. Pike Oliver focuses on master-planned communities. He is co-author of Transforming the Irvine Ranch: Joan Irvine, William Pereira, Ray Watson, and THE BIG PLAN, published by Routledge in 2022.

Early in his career, Pike worked for public agencies, including the California Governor's Office of Planning and Research, where he was a principal contributor to An Urban Strategy for California. For the next three decades, he was involved in master-planned development on the Irvine Ranch in Southern California, as well as other properties in western North America and abroad.

Beginning in 2009, Pike taught real estate development at Cornell University and directed the undergraduate program in Urban and Regional Studies. He relocated to Seattle in 2013 and, from 2016 to 2020, served as a lecturer in the Runstad Department of Real Estate at the University of Washington, where he also served as its chair.

Pike graduated from San Francisco State University's urban studies and planning program and received a master's degree in urban planning from UCLA. He is a member of the American Planning Association and the Urban Land Institute and a founder and emeritus member of the California Planning Roundtable.

https://urbanexus.com
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