Wednesday, April 29, 2009

Finance Nerd Alert

This is a pretty nerdy post, but I came across some really interesting mortgage stats & trends today. The punch line is we are not out of it yet. The defaults and foreclosures appear to be shifting up market, as in middle & upper middle class are now starting to have problems staying in their houses. The source is Mr. Mortgage, who writes an incredibly insightful blog on, you guessed it, the mortgage market.

This chart shows the situation pretty clearly. If you are into this kind of stuff, definitely read the entire post. The chart shows defaults on loans over $750k and they appear to be accelerating.

Connecting the dots, it seems to me that the mass layoffs are finally starting to hit the middle & upper middle class. After exhausting their savings the last 6 months, these people are finally having a hard time meeting their mortgage payments. Unfortunately there will be a ripple effect towards businesses that depend on discretionary income - restaurants, high-end retailers, etc. Some of this is already going on but it will probably get worse.

For the record, this chart scared the bee-jeezus out of me.