Debt in America

Abstract

Debt can be constructive, allowing people to build equity in homes or finance education, but it can also burden families into the future. Total debt is driven by mortgage debt; both are highly concentrated in high-cost housing markets, mostly along the coasts. Among Americans with a credit file, average total debt was $53,850 in 2013, but was substantially higher for people with a mortgage ($209,768) than people without a mortgage ($11,592). Non-mortgage debt, in contrast, is more spatially dispersed. It ranges from a low of $14,532 in the East South Central division to a high of $17,883 in New England.

Overview

Without debt, many people would not be able to invest in education, become homeowners, or start a small business. Failure to repay debt—“good” or “bad”—can create financial stress, ruin credit, and undermine community stability. Where in the United States is debt concentrated and what can that information tell us about financial well-being in those areas?
Key findings

  • Total debt and mortgage debt are highest in New England and the Pacific and Mountain states. The Pacific states and New England have relatively high housing prices, which is an important driver of total debt.
  • Total debt and mortgage debt are lowest in the central South. Lower-income and less populous areas tend to have lower total debt and mortgage debt. Although the South has low levels of mortgage debt relative to income, it has high nonmortgage debt relative to income.
  • Mortgage debt relative to home values is highest in the middle of the country. Although total debt and mortgage debt are highest along the coasts, debt is actually fairly low relative to home prices. Less housing-price growth in the central United States and differences in foreclosures may account for the disparity.
  • Nonmortgage debt, such as credit card, vehicle, and student debt and unpaid medical bills, is concentrated in the South. Credit outside the mortgage market funds many different types of investment and consumption through credit cards, vehicle loans, and student loans. Nonmortgage debt includes debt in collections, which may consist f unpaid medical and utility bills, among other things. Higher nonmortgage debt in the South is consistent with the higher concentration of alternative nonbank loans in the South, suggesting greater financial stress.

Key numbers

  • For US residents with a credit file, the average total debt is $53,850, average mortgage debt is $37,952, and average nonmortgage debt is $15,898.
  • Average mortgage debt accounts for 70 percent of average total debt across the country, yet only 21 percent of people have mortgage debt reported on their credit file.
  • Eighty percent of Americans with a credit file hold nonmortgage debt.

Cross-Center Initiative

Cross-Center Initiative: 
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