The Inner Monologue

Every few months, a chart flashes across social media showing U.S. mortgage debt at “record highs.” The line rises like a mountain range—steep, relentless, crimson red. It is meant to alarm: proof, supposedly, that Americans have once again mortgaged their futures. But if we pause and adjust our perspective—correcting for inflation and home values—the mountain shrinks to a plateau. The story transforms from one of reckless borrowing to one of mathematical illusion.

The Seduction of Nominal Numbers

At first glance, $13 trillion in mortgage debt sounds catastrophic. The number alone is enormous—an order of magnitude few of us can intuitively grasp. Yet, in a nominal economy, all things inflate. A dollar today is not a dollar twenty years ago. The first distortion, then, is time’s quiet arithmetic: when prices double and incomes rise, a debt of $10 trillion may be no more burdensome than $5 trillion once was.

Nominal charts tell us what people owe in pure dollars, not what those dollars mean. And meaning is everything. A gallon of milk, a square foot of home, or an hour of labor are far better benchmarks of burden than raw zeros.

The Home Price Correction

If we overlay mortgage balances with home prices, the illusion collapses. Since 2003, the Case–Shiller Home Price Index has more than doubled. A $200,000 home then sells for roughly $400,000 now. Yet mortgage debt has risen by a far smaller multiple—barely 2.2 times by 2024. Adjusted for those home prices, the “real” mortgage load has actually declined.

That means, proportionally, homeowners owe less against the value of their homes than they did two decades ago. The average borrower sits on more equity, not less. Mortgage debt, in relative terms, has not climbed a mountain—it has barely scaled a hill.

The Leverage Illusion

Economists often speak of household leverage—the ratio of what we owe to what we own. In 2007, on the eve of the financial crisis, that ratio peaked near 100%. Homeowners were living almost entirely on borrowed value. Today, it hovers far lower, even as the absolute dollar amounts soar.

Why? Because the denominator—home equity—has exploded. Rising property values, stricter underwriting, and years of accelerated paydown during the refinancing boom of the 2010s all built a sturdier base. The visual rise in debt is more about asset inflation than credit expansion.

If the 2007 chart was a warning flare, the 2025 chart is a mirage.

Inflation and the Shrinking Burden

Then there’s the broader economy. In 2003, a trillion dollars was worth more than it is today. Adjusting mortgage balances for the Consumer Price Index (CPI), total mortgage debt in “2003 dollars” has risen only modestly. Most of that growth occurred before 2008; the post-crisis years were flat or even deflationary in real terms. The apparent surge of 2020–2024 reflects rising prices, not reckless borrowing.

In real, inflation-adjusted terms, the household mortgage burden is only slightly higher than two decades ago—and vastly better distributed. More of it sits in the hands of high-credit, high-income borrowers. Less of it is tied to speculative property.

The lesson? Nominal panic is easy. Context is harder.

The Post-Crisis Discipline

After 2008, banks learned to fear their own appetites. The Dodd–Frank reforms tightened lending standards; low-document and zero-down loans largely vanished. Borrowers, too, internalized the trauma. Homeownership became more sober, less speculative.

During the pandemic housing boom, many feared a return to 2006—but the numbers tell a different story. Yes, mortgages expanded, but so did equity. Homeowners refinanced into record-low fixed rates, locking in stability. Far from overleveraged, they emerged fortified against rising rates.

In effect, the system quietly de-risked itself even as the dollar totals ballooned.

The Real Question: Who’s Owing and Who’s Owning?

Averages hide distribution. The median borrower today has better credit and more equity than ever, but inequality persists. Investors own a growing share of the housing stock, and first-time buyers face brutal entry costs. The paradox is that aggregate debt looks safe because fewer people are borrowing, not because housing is more accessible.

The debt is concentrated among the stable and wealthy. The risk, then, has shifted—not from overborrowing, but from underownership.

What the Chart Really Means

When we strip away the nominal veneer, the chart you uploaded tells a subtle, counterintuitive story:

Nominal mortgage debt (unadjusted) — up roughly 115% since 2003.

CPI-adjusted debt (real dollars) — up about 40%.

Home-price-adjusted debt — down nearly 20%.

The absolute number has never been higher, but the relative leverage—the true measure of risk—has rarely been lower.

In plain English: we owe more, but we can afford more. The danger lies not in rising debt but in mistaking price-level illusion for crisis.

Conclusion: The Peril of Misreading Mountains

A red line rising on a chart looks dramatic. It plays to our instinct that upward equals danger, that bigger equals worse. But economics is a game of ratios, not raw numbers.

America’s mortgage story in the 2020s isn’t one of recklessness. It’s one of recovery, discipline, and inflation’s sleight of hand. The chart that looks like Everest is, in truth, a mesa—flat when seen from the right perspective.

Debt, like any number, demands context. Without it, even the sound of prosperity can be mistaken for the rumble of collapse.