re: The debt-to-income ratio for all homebuyers just hit 40% for the first time in history

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You know that contractor you call that never shows up to give you an estimate? You found him.

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Ehh...doing storm repair a few years ago reminded me why I got out of dealing with residential and the general public back in 2009. Never again.

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A few years ago I figured it would burst but now I am not sure anymore. We keep printing our way out of things and kicking the can down the road.

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I kind of am leaning toward a long slow soft landing (multiple years), but also see the potential for more of a collapse.

The only thing I’m sure of is that the current trends are unsustainable much longer.

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You think the bubble bursts or limited inventory allows for a soft landing/slow decline?

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The short answer is that the economic bubble (built on debt) will burst eventually and Congress is blithely juggling knives all around it.

A little longer answer...

Since 2008 the federal government has (essentially) been borrowing money in order to service the debt on previously borrowed money. As time has gone on, those annual deficits have generally increased while the total annual debt servicing remained somewhat steady due to interest rates being negligible.

Interest rates began increasing over a year ago yet Congress has decided that $1.3T+ deficits should be the norm going forward. Higher deficts + higher interest rates on those deficit dollars = more borrowing just to service it all. Current debt servicing expecting for this year is likely to be well over $1T ( LINK) with deficit spending currently estimated to top $1.5T (likely over $2T if rumored revenue shortfalls end up being true).

To put this differently, the federal government would have had to cut spending this year by ~25% (that's across the board, from pay for active military to the water bill for a guard house at Yosimite to the salaries of members of Congress to electricity for the Pentagon, etc) just to balance the budget. Instead, they increased spending by ~32%.

Math doesn't care "why" deficit spending increases while interest rates also continue to increase and one can play accounting tricks (like using inflation to downplay the actual amount by obfuscating it with value) for only so long until repercussions cannot be put off (nor hidden).

The only real questions are "when" and "what happens then".

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ALL politicians and elite are working together these days. The whole Republican/Democrat battle is smoke and mirrors while they're doing things behind our backs.

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Exactly. Stop voting for Rs and Ds. Almost anyone else is better.

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Out of curiosity, how old are you?

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Early 40s

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Decatur and tboy will be here to tell us that this is all white supremacist conspiracy theory

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And that other lugnut will show up to call him a "MAGA commie" for making this thread.

This is all based on unemployment numbers. As soon as employment drops, they will level interest rates. When it plummets they will lower to catch up.
There are other ways to curb inflation than interest rates, especially with a housing g shortage. But nobody wants to cut off money to any potential voter.

I’m a home builder. I have a buildup of customers who are waiting for rates to fall. If and when they fall, my pricing will skyrocket.

Do we still get a Jubilee every 7 years?

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I’m a home builder. I have a buildup of customers who are waiting for rates to fall. If and when they fall, my pricing will skyrocket.

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It they are waiting for sub 5% mortgage rates they may not live long enough to build a new home.

If homeowners with 40% debt get in financial trouble. They are going to quit paying student loans, credit card debt and auto loans before defaulting on the mortgage.

Fascinating data.
Question though. It could be argued that the financial crisis was triggered because of bank exposure, not the actual homebuyer debt. So how are the banks exposed this time around, if anything, on the same scale? If not anything, what is the triggering event that will lead to the correction this time?
I'm guessing these numbers will continue to get worse because it will be longer until some triggering event, but I am just speculating.