In the past few years, home prices have fallen back to where they were before the bubble. But mortgage debt still has a long way to go.
Bringing debt levels back down — what economists call de-leveraging — is a long, painful process. It's a key part of the bust in the boom-and-bust cycle, and it's often characterized by slow economic growth and high unemployment.
One recent study found that the de-leveraging process typically takes as long as the credit boom that preceded it. That study found that the recent credit boom lasted for about a decade, and ended in 2007.
So if the pattern holds true this time — and that graph above suggests it might — we will be in for several more years of de-leveraging.
The CalculatedRisk graph above is based on data from the Fed's latest Flow of Funds report, which came out today.