from Liberty Street Economics
– this post authored by Andreas Fuster, Eilidh Geddes, and Andrew Haughwout
In part one, we discussed the extreme swings that household leverage has taken since 2005, using combined loan-to-value (CLTV) ratios for housing as our metric. We also explored the risks that current household leverage presents in the event of a significant downturn in prices. Today we reverse the perspective, and consider housing equity – the value of housing net of all debt for which it serves as collateral.