New York Times columnist David Leonhardt argued as much in yesterday’s Economix column. Although Americans are prone to excess in the debt department, overall, the availability of debt is a good thing because it enables families to weather bad times, according to Leonhardt. He makes an interesting point and he’s right, really. But debt is only a good thing when it’s used for real emergencies or unexpected costs like car repairs that ensure you can still get to work everyday. Debt is not good when you use it to buy a more expensive car than you need, clothing, entertainment, vacations and mortgages you can only afford as long as your home value is appreciating at 20 percent a year.
Although if only 9.4 percent of San Diegans can afford a median priced home, I’m not sure how anyone affords their mortgages at all. Oh right, all that easy lending. Leonhardt gets to that one too, arguing that the housing crisis sparked by easy lending standards of the boom years will result in a stronger mortgage market over the long term. If, of course, lenders develop clearer guidelines for borrowers.