I’m sure you have heard many things about the amount of money Korean households are spending on their homes, and the results of those expenditures are stunning. But did you know that they are actually spending more on their homes than the United States? The exact amount is currently unknown, but according to the Korea Herald, it is believed to be somewhere between three and seven billion won (approximately US $3.5 million – $7.6 million).
We do know that, as of this moment, we are spending $7.6 billion on homes, per capita: about $4,000 per house. We are also spending about $10 billion on things like clothes and household equipment. It is expected to go up to $30 billion per year with that amount estimated at $20 billion. But if we stop spending on our homes, we will see that almost all of our household income comes from our homes.
If we keep spending this way we will see the entire country’s economy collapse. This is because in Japan, the amount of their home prices was similar to ours in 2010, but at the same time was about 10 times larger.
If we stopped spending on our homes (because we’re spending more than we’ve ever spent on our homes) we would see the entire countrys GDP collapse. If we spent more on our houses we would see the entire countrys GDP fall.
The Japanese spent on their homes was roughly 7.6 billion, but the amount of their total housing debt was 3.7 trillion. This is about 20% of the entire Japanese economy and more is coming. If we stopped buying homes because we spent more than weve ever spent on our homes we would see the entire countrys GDP collapse. If we spent more on our homes we would see the entire countrys GDP fall.
For starters, it’s a little more difficult to estimate the cost of a house if it’s really expensive. For example, the entire Japanese economy is $8 trillion in debt. If we spent 10 billion on our houses we would spend $30 billion on our homes. In this case $5 billion would be less than the entire amount of debt. This is about 10 of the entire Japanese economy and more is coming this month.
That’s a lot of debt, but it doesn’t mean we would want to. A better way to look at it would be to look at the Japanese housing market and compare it to the US mortgage market.
The US has 3.8 billion mortgage loans outstanding. The Japanese have a debt-to-income ratio of just over 70 percent. If you compare the Japanese debt to the US debt you can see that the Japanese debt is more than 3 times the debt of the US.
That’s quite a lot of debt. The Japanese are also quite comfortable with their debt. That’s because they’ve been able to buy assets that are not as risky as a house. As a result, they are less conservative about their borrowing that the US is. Their government has also been spending heavily in the last year, paying back debt at a high rate. This may be good for the Japanese economy because it will help to keep Japan’s population from growing too fast.
The idea is you get a lot of people to pay for things by buying up your assets, but not every person gets it.