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1.2 Million Households Disappear, Putting Downward Pressure on Home Prices and Rents
As I wrote Monday:
In really bad times, people who are evicted from their
houses will not rent.
Instead, they will move in with friends or family
for some time.
As the Wall Street Journal explained last October:
Driving the change [i.e. large numbers of rental
vacancies and lower rents] is the troubled employment market, which is
closely tied to rentals. With unemployment at 9.8% — a 26-year high —
more would-be renters are doubling up or moving in with family and
friends during periods of job loss. Landlords have been particularly
battered because unemployment has been higher among workers under 35
years old, who are more likely to rent. Nationally, effective rents
have fallen by 2.7% over the past year, to around $972.As Zack’s Investment Research writes:
A smaller percentage of Americans owned their own homes
in the 4th quarter of 2009 than at any time since 2000. In the 4th
quarter 67.2% of Americans owned their own home, down from 67.6% in the
third quarter and two full percentage points below the peak set in the
fourth quarter of 2004.
As the first graph below shows (from Calculated Risk) …:
So where have all these people gone who are no longer
homeowners? It does not appear that they are moving into apartments or
rental housing. As the second graph shows (also from Calculated Risk),
the rental vacancy rate is now at 10.7%. While that is down from the
record level of 11.1% in the third quarter, it is up from 10.1% a year
ago, and the 7-8% range that was normal for most of the 1990s …
***
It thus appears that many of the people who used to own their homes,
and no longer do, are doubling up with friends and family. This is
probably not their first choice of living arrangements, but they are
doing so because they have no other choice economically.In other words, the correlation between falling home prices and
rising defaults, on the one hand, with increasing rental demand and
higher rental prices, on the other hand, doesn’t hold in a really tough
economy.
Today, MSNBC adds some important details:
More than 1.2 million households [have been] lost to the
recession, according to a report issued this week by the Mortgage
Bankers Association that looked at data between 2005 and 2008. That
number doesn’t include information from 2009, when job losses and
foreclosures continued to rise.So it’s likely that the full impact of
the 8.4 million jobs lost and nearly three million homes foreclosed on
since the recession began has taken an even bigger toll on the number
of American households.
“Given the depth of the downturn in 2009, and the ongoing weakness
in the job market through the beginning of this year, this study gives
no reason to expect that household formation has picked up at all,”
said Gary Painter, a professor at the University of Southern California
who conducted the study.
The study also shed some light on what happens to the people in those “lost” households. It’s
widely assumed that many who lose a home to foreclosure become renters.
But since the recession began, there has been a five-fold increase in
“overcrowding” of remaining households — defined as more than one
person per room, according to the study.
That doubling-up is happening as families who lose their homes move
in with friends or family. In other cases, younger people have delayed
moving out on their own, instead staying with their parents until the
economy improves. Others who fail to find work after graduating from
college move back home.
The decline in households is weighing on both the
home buying and rental markets. Since the number of home foreclosures
began surging in 2007, the national homeownership rate has been
steadily falling. But renters also have been forced to double up or
move in with friends or family. That’s a major reason that the vacancy
rate for U.S. apartments stood at 8 percent in the first quarter, the
highest level since 1986, according to a report this week from Reis, a
real estate research firm.
***
Homeownership levels, meanwhile, continue to decline. New
foreclosures filings are running about 300,000 a month, according to
RealtyTrac. There are currently some 5 million homeowners that are 90
days or more past due on their mortgages, according to Fannie Mae chief
economist Doug Duncan.
***
In some cases, the loss of a house to foreclosure is leaving
families homeless, though there is little national data available on
how many are affected. A recent study
by the Department of Housing and Urban Development found family
homelessness on the rise since the recession began, with the biggest
increases in suburban and rural areas.
Other groups, like the National Alliance to End Homelessness, report
that a rising number of older adults are without a permanent place to
live.
“The limited existing research tells a story of increasing homelessness among adults ages 50 and older,” the group said in a recent report.
The formation of new households isn’t expected to pick up again
until at least 2012, according to the MBA study, even as the population
continues to increase. Between 2005 and 2008, those 1.2 million
households were lost even as the population grew by 3.4 million.
»
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My utopian dream, sigh. In it Kkkrugman is laughed off of 'Mercan Idull for thinking he could sing! You are talentless Paul, they are all going to laugh at you.
I wish those who were living with their families would TALK about the depression at such times as dinner (hey America, remember when you sat at a table during dinner and discussed your day?) instead of watching "MA" GAGA and 'Mercan Idull on TV.
Great piece George. I wish you wrote for the NYT.
Not really. The family of the person who has recently moved back in already know the financial situation sucks. They wouldn't have moved back in otherwise. So what you're asking is that the new roommate drag the rest of the household down to his level. A mention here or there is ok, but depressing your family because you are is rude.
That would be true under normal circumstances, but what we're seeing isn't your everyday recession. It isn't even your garden variety Depression. We've never seen anything like this before. It is basically the end of the capitalistic growth model. I would suggest reading an article by Matt Taibbi. The only way we'll stop these monsters is to understand what is happening to us. They want you to be depressed, scared, and unable to make heads or tails of what is happening to you. That way you don't have a prayer of stopping it.
Hi Downrodeo:
May I suggest that you get educated about what capitalism is. We do not have it. It is in fact impossible without capital. We don't have capital we have fiat currency and fractional reserve (fancy way for government and elites to steal from everyone else's accumulated wealth.) We don't have free, but we do have controlled markets that the first users of the phony “capital” get to control. Perhaps the opposite of capitalism describes us. Until the madness collapses under its own parasitic weight suggest you get your hands on as much gold silver food and firearms you can stock. May I suggest you study Austrian branch (school) of economics. Start with Ludwig Von Mises, Murry Rothbard, and Hans Herman Hoppe for a good start. Then come back and openly repent for your ignorance.
I agree with your point about not getting depressed or scared. Certainly we need to get educated and I hope you get motivated to learn what capitalism truly is and why it is was such a good thing way back when we had it before, the "government" became the tool of the too-big-to-compete well companies. It is all a matter of history but you have to look carefully and understand what you are seeing. We may be free again but we are going to have to get back to work.
VE,
thanks for the input. I understand the discrepancy between what capitalism actually is and what we have today. I would agree that we do not operate under a capitalistic system.
What I was trying to articulate is that we can't just grow economies indefinately. One of the problems with capitalism is there are no instructions for what to do when we can't grow anymore (they also left out the part about what we should do when corporations and special interest groups hijack your government from under your feet!).
Also, I've read Mises, Rothbard, Haskill, and if you put a gun to my head and made me choose which model of economics I liked best I would definately choose the Austrian School.
I repent for nothing, for I have sinned not!
Happy to hear it :). But once again, the best way to grow a civilization is to let the capital flow to where the market will push it. This will drive the new technologies with ever improving efficiencies in the utilization of resources. Also, (semi-esoteric/ research thoroughly yourself to be convinced), we should have had zero point energy in this country 90 years ago. That alone would turn this planet into a zoological park while at the same time supporting 10 times the population in currently does, and with a much higher standard of living . But that is another subject and gets into some very strange areas and why this civilization is so “dark”.
Regarding wresting control back, Hans Herman Hoppe is very good on that point, and you can refresh your research on “contractual societies”. Regarding that subject elsewhere today on ZH I posted this series on the subject:
Friend, there is an alternative. The colonial Americans came real close to achieving it but the Alexander Hamiltons of the world sneak in and the rest becomes a repeat of history as you envision. We do something different this time! Study the works of Hans Herman Hoppe, Murray Rothbard and Ludwig Von Mises. You make a system where you always retain the power to cancel the contract and stop paying the moment the contract is breached. You allow multiple entities to provide what ever services you imagine you need a government to provide you. Those entities compete for the privilege of providing those services and you remain free to choose which ever one you think best. These entities in turn enter agreements on how to resolve disagreements between each other: (some entities provide adjudication services based on the common law most agreed to as “just” by the society in question). Peaceful adjudication is always in everyones best interest as war is very expensive in life and property. No one holds a monopoly on “lawful” force. No one holds a monopoly on adjudication in a particular region. Monopolies are bad and can only exist when the mother of all monopolies, “government”, exists to make them possible.
The one who pays for the service retains ultimate power of the purse, not anyone who welds the gun and would presume to call itself “government”. Those who wish to live by fraud or force quickly end up dead or running for greener pastures elsewhere. All other societies see how well this works and soon there is nowhere for the parasites to run to and humanity enters a new era of peace, prosperity and freedom.
It is a contractual society. You have no “government” in the traditional sense that humans have been repeatedly brainwashed into thinking they need. About the only way left for Americans to redeem themselves and pay their debt (karma) for all the crimes committed in their name is to be the first to give the world this most precious gift that the other societies of the world may freely choose to adopt as they learn the blessings it reaps.
Observer posted a challenge:
Great points but when we have other centralised power hungry entities(governments) eager to divide and rule other societies, this system is likely to make it easier for them to do so. Maybe we can have this system for internal governance and a centralised one for the nation's defence and foreign policy. I mean the Armed Forces and the external intelligence agencies and not 'homeland security' when I said nation's defence
To which I replied:
Hi Observer:
At first glance you might think so, but if you deeply analyze human actions you might form a different opinion. The motivations and moral strength (very important in conflict) are quite clearly cut and very polarized in the favor of the free society. I invite you to see what Hoppe and Rothbard had to say about your belief. Such a system is very robust. The disrupter states have a tenancy towards destabilization themselves by the very presence of such a system. All systems are composed of individuals, and the motivation of each individual to “defect” to this system once they come over is quite great. (Assuming they are of the non-parasitic type.) A ruff analogy was the defection problem of the Hessians to the revolutionary Americans side. A portion who do not defect have a tendency to become more revolutionary themselves if they return to the tyrant state. Also the cost vs. benefit of such invasion is a rather poor payoff. Internal security can be quite high in such a society, if you follow Hoppe's arguments about it. In such a state only those who own property or are invited in by property owners gain admittance to the region. There is a security barrier that is higher just to get in. Agent provocateurs suffer a better chance of detection when they attempt to enter. Also the level of security at any geographic point within the system is much greater, since there is almost nothing like a “commons” (almost everything is “private”) and anyones presence gains immediate attention if they are not recognized or do not belong. As long as the members of the free society remain well educated about their society, it is very very hard to subjugate such a people. The same power that structures their society makes it hard for a tyrant to maintain any kind of worthwhile control. It simply does not pay.
Also, just to answer the other aspects of your question: such a system has very little need for “external intelligence” and the system does not have, nor does it need a “foreign policy”. The “policy” if you call it that is expressed in the rules and practice of the security and insurance entities who come into immediate contact with any one or group who attempts to gain entry anywhere in the the society's encompassed region. Also when a person or group attempts entry any other security firms and insurance entities not immediately in contact with the attempted breach also have a motivation to come to assistance if needed and additional help is deemed appropriate to the level of the threat, because if the threat is sufficient it becomes a concern to the property owners of all adjacent regions that have different security and insurance arrangements and in fact to every person in the region as a whole if the threat is great enough. Such a system is very proactive because the prevention of any damage whatsoever before it even happens is the primary goal. Action is very quick in coming and is as devastating as the system is capable of making it, if the particular need necessitates it. In fact in such a system if the treat were sufficient such a system would be the best at motivating and mobilizing EVERY Single able bodied person within is, not just the security and insurance entities to come to the aid of any point of attack. Always think of the analogy to a body and its distributed immune system. Each phagocyte would be analogous to every security or insurance firm or even the individual.
The fundamental idea of the system itself is highly provocative to all people anywhere who live by honorable activity. A parasite is by extension a potential threat to every non-parasitic person on the planet. There becomes a strong motivation to all people living in geographic proximity to such a system as they learn about its benefits to in turn adopt a contractual society as well. And where culture and practicality permit it, it is in the interests of the original society to openly embrace and integrate into an active cooperation network all new break away orbital societies and regions it is in proximity to. The only “foreign policy” of a contractual society is the fundamental universal natural law truths upon which it is founded. Thusly the foundational principle of voluntary exchanges without the initiation of force or deception become an ambassador/ “foreign policy” and in fact a revolutionary movement in the mind of each individual the moment that individual comes to understand what a society like that looks like. Seeing is believing and people learn fast. At a certain point it will be like a phase change to human civilization. A new age very different from ours and forever divorced from the idea of a monopoly of force and adjudication as a way to gain security and justice will have come.
Thusly you can come to see that any move towards a centralized “world government” or centralized paper money or cashless system, world army, etc ... should be instantly recognized as the universal enemy of all people of good will everywhere. Ultimately we will be free, it is our destiny and our pedigree. You come to see the fallacy of the idea of centralization/authoritarianism which is forever refuted. In its place stands the ideas of universal natural law truth expressed universally in a totally and maximally distributed and expanding network of free, moral, and productive individuals.
(end quotes) I hope that stuff can stimulate some thinking of the subject.
Amen brother. That said it all.
VE, Switzerland is close to the competitive/contractual society you promote. It has natural barriers of fierce degree (the Alps), and an armed citizenry, but no nuclear weapons. We have the latter, but few natural barriers, and far fewer armed citizens. However, I rather doubt that Switzerland is on any demonic tyrant's short list for nuclear targeting; we are (and I am not only referring to the usual suspects of late, but Mr. Putin as well).
I fully agree that such a society would be ideal, but I think it's a bit late in the day to achieve it here. The military-industrial complex that Eisenhower so correctly warned us about is firmly entrenched; if you find that observation odd, please take a look at Rosslyn, VA, which is where I work (it's directly across the Potomac via the Key Bridge from Georgetown, DC, and has all those nasty high rise buildings that DC can't authorize because of the Washington Monument). It's Security City, private and public. And it's not going away anytime soon...
The present system is unstable and must collapse. You just need to look as the trends. It can not continue. All tyrannies fall. They always think they have figured a new way to enslave us that cannot fail. Meanwhile those who are founded in freedom more further and further ahead. The structures of the tyrant's power are extremely brittle. Many who are its servants would defect if they could see an alternative. That alternative exists and once it becomes a reality in the minds of sufficient people it will come into being. Promise. So I ask you to learn about it and spread the word!
What capitalism?
Also:
The first rule about being fleeced is you don't talk about being fleeced...
The second rule about...
Puff and spin is all you are going to hear from Big Brother at this point. These missing households are holed up in hotelrooms ready to throw their cash hoard at the avalanche of real estate buying opportunities in the seasonal spring buying season.
I donno, It's Spring...I think people have gone camping.
And not in tents - reclined seat of the Toyota.