renters – The Burning Platform

Housing Recovery – Not So Much

“Everyone wants a house, and that’s a big problem.

We’ve noted in the past that there is a substantial issue in the housing market right now. Too few homes are being built for the number of people that want to move into them, thus driving up prices and keeping some lower-end or first-time buyers out of the market.“

It is quite amazing that amount of optimism surrounding the housing market which has yet to recover substantially from post-financial crisis lows given the exorbitant amount of monetary stimulants injected into it.

The chart below shows the Total Housing Market Activity Index which is a composite of new and existing home sales, permits and starts. Yes, housing has recovered, but remains well below levels seen in 1999.

But let’s not let a trivial matter of data get in the way of a good story.

“Meanwhile, according to the Conference Board, although the share of households planning on buying a home in the next six months ticked down in April to 5.4%, that is significantly above the average of 3.6% recorded since 1978,” wrote Matthew Pointon, property economist at Capital Economics.

While individuals may CLAIM they want to buy a home when asked, there is a massive difference between “wanting to do something” and actually being able to do it.

Notice in the chart above that the spike in “home ownership desires” spiked in 2011 and has been steadily climbing since then. Surely, if we have a record number of households planning to buy a home, that should be reflected in the home ownership rate as well.

Considering that almost 80% of Americans can’t meet small emergencies, 1-in-5 families have ZERO members employed, and incomes are less than they were in 2000 – the chart above makes a good deal of sense. It is also why we have seen the rise of the “renter nation.”

Of course, I am assuming that Matt Pointon wasn’t talking about the newest fad in housing for Millennials: The 150-sq. ft. micro-home.

WHY SO WORRIED?

What a bunch of worry warts. Just because the Fed and Wall Street have driven home ownership rates to an all-time low and increased the number of renters to an all-time high through their warped monetary schemes, while driving rents up at an annual pace of over 8%, why worry?

Just because your monthly rent is at an all-time high, while real median household income is at the same level it was in 1989, why worry?

Just because your healthcare costs are rising at an annual rate of 10% or more, why worry about making your rent payment?

Just because you have $40,000 of student loan debt and a waiter job at Applebees, why worry about that silly rent payment?

Just because filling up your leased SUV is 30% more expensive than it was in mid-February, why worry about rent?

Don’t worry, be happy.

You will find more statistics at Statista

RENTERS R US

About that housing recovery. The U.S. population has grown by 8% since 2005, while the number of households has grown by 5%. In addition to the weak overall household growth, due to stagnant wages, massive student loan debt, and only Obama shit service jobs, there have been no new owner occupied households. The number of owner occupied households is down 1%, while the number of rental households has soared by 16%.

The home ownership rate is now at a two decade low and sits at the same level it did in 1970, before Nixon closed the gold window and unleashed a debt and inflation tsunami upon our nation. The Federal Reserve solution to every bubble they create is to print enough to create another bubble. They have expanded their balance sheet by almost 600% since 2008, and have succeeded in crushing the middle class, senior citizens, and young people who should be buying their first homes.

Continue reading “RENTERS R US”

California Rental Armageddon: Nearly half of Los Angeles adults doubling up, working class moving out, or you have the option of simply living in poverty.

Guest Post by Dr. Housing Bubble

California like the rest of nation has gained a large number of rental households. Many of these households were formed from the ashes of the 1 million completed foreclosures. Over the last ten years the nation has lost 1 million net homeowner households and has gained a whopping 10 million rental households. L.A. County with roughly 10 million residents is predominately a renter county. Over the last ten years the large gain in California households has come in the form of rentals. Maybe you find living with roommates deep into your 30s and 40s as awesome or maybe you enjoy living a Spartan lifestyle just so you can pay your monthly rent while hearing helicopters overhead in your hipster neighborhood. Every piece of research simply shows that people are being pushed into spending more money on housing. Some say move out. Well guess what? Many middle class Californians are doing just that. The rental and housing market has gone into full on financial Armageddon mode yet in typical California fashion, the sun keeps glowing brightly. Ironically over time people think it is normal to dump every nickel you have into housing. Let us look at three trends impacting the rental market in California.

Moving out

The urge to buy real estate is a deeply rooted American concept, although Millennials might be changing their tune. For the majority of the country, buying a home is a simple endeavor. With your typical house costing $200,000 and with low interest rates, simply having the median household income is good enough to not have your home consume every penny of your income. But in California, we have $700,000 crap shacks that look as if a two-year old developed it in their first art experiments. In the last couple of years, there is a vocal group saying “hey, if you can’t make it in California get out!” Apparently some people are listening to this: