The Detroit Free Press reports that census data shows that 556,000 Michigan homes (19% of all owner-occupied homes in the state – 2% over the national average) have some kind of second loan on them. At the same time, the median value of homes has increased 19% in the last five years (much less than the national average of 32%).
Dana Johnson, chief economist for Comerica said “There’s a widespread trend for people to tap into their equity nationally. Obviously, here there’s less equity to tap as elsewhere … It puts borrowers in a more precarious position.”
And from the “Had just enough to do with the topic to be found in a search” Department, here’s a passage out of Henry Schoolcraft’s memoir:
The plethora of success which has animated every department of life and business, puffing them up like gas in a balloon, since about ’35 has departed and left the fiscal system perfectly flaccid and lifeless. The rage for speculation in real estate has absorbed all loose cash, and the country is now groaning for its fast-locked circulating medium. A friend at Detroit writes: “With fifty thousand dollars of productive real estate in the city, and as much more in stocks and mortgages, I am absolutely in want of small sums to pay my current expenses, and to rid myself of the mortification produced by this feeling I am prepared to make, almost any sacrifice.”