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These timeseries are values that relate to the price of housing in the US. First, the basic home price numbers from Case Shiller's 10 RSAs, as well as 30 year mortgage rates. Rates have definitely done nothing but become cheaper over time.

Home Prices & Mortgage Rates

home prices chart mortgages chart

On the way up, the DPI chart (Debt Payments as a % of Disposable Personal Income) shows the increased willingness of people to take on a higher payment burden as the bubble accelerates. With rates falling, the only way for that left chart to accelerate is the greed of the buyer. "I can justify higher payment burden because I'll make up the difference in capital appreciation" - the definition of a speculative or ponzi borrower. Why do we imagine debt payment burdens have dropped so much since the pop? Is it just rate reductions? Or maybe defaults? Or both together?

Once the bubble pops, the right chart takes hold, namely, the absolute debt level compared to the the wages & salaries available to pay it down. Unlike the DPI chart, the debt burden chart isn't controlled by the Fed. The huge debt overhang is not so quickly removed. Many underwater homeowners will take at least a decade to return to the situation where they have enough home equity in their home to sell, pay the realtor, and have the 20% down payment to buy a new house.


Debt Payments vs DPI, Mortgage Debt vs Wages & Salaries

DSR chart DTI chart