Daily Economic Update <ul><li>The Federal Reserve recently released its quarterly data on homeowner and renter finances fo...
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Daily Economic Update for December 20, 2010

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Daily Economic Update for December 20, 2010

  1. 1. Daily Economic Update <ul><li>The Federal Reserve recently released its quarterly data on homeowner and renter finances for the U.S. In particular, the homeowner financial obligations ratio declined by 2.3% in the third quarter. </li></ul><ul><li>The homeowner financial obligations ratio is calculated as the ratio of total homeowner financial obligations (such as mortgage debt service, homeowner’s insurance, property taxes, consumer debt, and automobile lease payments) to total disposable personal income. An increase in the ratio suggests homeowners are more indebted, and a decline suggests they are less indebted. </li></ul><ul><li>The primary cause for the decline in the financial obligations ratio for homeowners was a 2.3% decline in the consumer obligations ratio (obligations include consumer debt and automobile lease payments). Although, the mortgage/home related obligations ratio (obligations includes mortgage debt service, homeowner’s insurance, property taxes) declined by 0.9% in the third quarter, these financial obligations still remain at approximately 2005 levels, or approximately ten times disposable income. </li></ul><ul><li>The high level of mortgage/home related obligations helps explain some of the current lethargy in the housing market. </li></ul>Produced by NAR Research December 20, 2010

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