> The growth of home mortgage debt has been the major contributor, at
> least in an accounting sense, to the decline in the personal saving
> rate in the United States from almost 6 percent in 1993 to its
> current level of 1 percent.
These kinds of analyses seems to always jump over what seems to me to be obvious: (a) the majority of 'savings' in the past was built up in order to -- ta-da -- buy a house (no surprise when they do it!); (b) many people have substituted pre-tax investments (i.e., IRAs, 401(k)s, etc.) for traditional "savings" -- the "savings rate" (which doesn't include such accounts) is therefore akin to the number of horsehoes consumed by the average family: an outdated way of measuring SOMETHING. Unless/until the tax advantage of these plans is erased (good luck!), I don't see this trend changing.
In fact, the current situation advances this as optimal:
- maximum home equity debt/leverage - maximum contribution to tax-advantaged accounts
If you're doing anything else, you're missing out (and paying more tax than you should). What kind of a doofus puts money in a (taxable, low-yield) savings account?
Tut-tut'ing the drop in the "savings rate" in the US is really bogus.
> This combination has led to a significant increase in home mortgage
> debt. The rise in home prices creates capital gains, which become
> realized with the subsequent sale of a home.
(Though of course, due to Clinton, it's often not taxable)
/jordan