Home Prices Fell Through The Floor. Mortgage Debt Didn't.

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.