The Federal Reserve conducted a study on Millennials and tried to ascertain why so many of them are living at home. Is it too much student debt? Lower incomes? Or is it that home prices are simply unaffordable? The study finds that all of these factors have a big impact on why many Millennials are living at home and why the first time home buyer market is performing so badly. (Hint: EB-5)
Do you want to know why Millennials seem so angry? We promised them that if they worked hard, stayed out of trouble and got good grades that they would be able to achieve the "American Dream". We told them not to worry about accumulating very high levels of student loan debt because there would be good jobs waiting for them at the end of the rainbow once they graduated. Well, it turns out that we lied to them.
The last time US homeownership declined down to 64.4% (which the Census Bureau just reported is what US homeownership declined to from 64.7% in Q2), was back in the fourth quarter of 1983. Here's why.
The 30 statistics that you are about to read prove beyond a shadow of a doubt that the middle class in America is being systematically destroyed. Once upon a time, the United States had the largest and most prosperous middle class in the history of the world, but now that is changing at a staggering pace. Yes, the stock market has soared to unprecedented heights this year and there are a few isolated areas of the country that are doing rather well for the moment. But overall, the long-term trends that are eviscerating the middle class just continue to accelerate.
The record-breaking outflows in high-yield bonds are not the only indication that the U.S. economy could be on the verge of very hard times. Retail sales are extremely disappointing, mortgage applications are at a 14 year low and growing geopolitical storms around the world have investors spooked. For a long time now, we have been enjoying a period of relative economic stability even though our underlying economic fundamentals continue to get even worse. Unfortunately, there are now a bunch of signs that this period of relative stability is about to end. The following are 14 reasons why the U.S. economy's bubble of false prosperity may be about to burst...
If you are fortunate enough to have a job in America today, the phrase "just over broke" probably describes you. Yes, there are a handful of jobs that certainly pay very well, but most Americans that work for somebody else are just barely making it from month to month. More than half of all working Americans are living paycheck to paycheck, and more than half of all working Americans make less than $30,000 a year. Something has gone horribly wrong, and yet our leaders just keep telling us how wonderful our economy is.
When looking at residential real estate, we often tend to focus almost solely on recent price movements in assessing the health of the housing market at any point in time. But as both homeowners and income-earners in the larger economy, of which the housing market is an important component, to really understand what's going on, we need clarity into the larger cycle driving those price movements. The more we look at today's data, the more it looks like that we are in a new type of pricing cycle -- one that homeowners and housing investors have no prior experience with. And the more we learn about the fundamentals underlying the current cycle, the harder it becomes to justify today's home prices on any sustained level. Meaning a downward reversion in home values is very probable in the coming years.
If you believe that the U.S. economy is heading in the right direction, you really need to read this article. As we look toward the second half of 2014, there are economic red flags all over the place.
You would think that with all the surefire bets in housing that people would be dialing up their realtors and heading out every weekend to make those lustful multiple offers presented in PowerPoint format on properties. Yet the overall market data shows a different story. The house horniest of them all, investors, are clearly pulling out of markets including sunny and inflated California. Apparently home prices do matter when making investment decisions. Cash strapped hormonal buyers will keep on buying but housing prices are set on the margin. That margin is becoming razor thin on current volume. I find it interesting that the biggest housing supporter of them all, the National Association of Realtors is also somewhat tepid on this recovery. Why? Because home sales volume is pathetic. Keep in mind they make money on selling and buying. Volume is key. Their model doesn’t work so well with banks holding onto properties like Gollum holding onto the ring and the foreclosure process being dragged out like the forever college student enjoying year 10 at Santa Monica City College. You see this overarching trend occurring in many metro areas across the country. Investors have been propping up the market since 2008. They are now slowly pulling back. You are also starting to see a convergence of analysts putting out their predictions on how overvalued housing is and backing it up with mountains of data. The other side of the argument points to prices. Sure, they’ve gone up but value is created by actual price and that is sort of the point. The answer as always isn’t so simple but using your thinking cap it is important to understand that housing is not a “no brainer” decision in this market.
Did you know that there are nearly 102 million working age Americans that do not have a job right now? And 20 percent of all families in the United States do not have a single member that is employed. So how in the world can the government claim that the unemployment rate has "dropped" to "6.3 percent"? Well, it all comes down to how you define who is "unemployed". For example, last month the government moved another 988,000 Americans into the "not in the labor force" category. According to the government, at this moment there are 9.75 million Americans that are "unemployed" and there are 92.02 million Americans that are "not in the labor force" for a grand total of 101.77 million working age Americans that do not have a job. Back in April 2000, only 5.48 million Americans were unemployed and only 69.27 million Americans were "not in the labor force" for a grand total of 74.75 million Americans without a job. That means that the number of working age Americans without a job has risen by 27 million since the year 2000. Any way that you want to slice that, it is bad news.
No, the economy is most definitely not "recovering". Despite what you may hear from the politicians and from the mainstream media (shrugging off today's terrible GDP print), the truth is that the U.S. economy is in far worse shape than it was prior to the last recession. In fact, we are still pretty much where we were at when the last recession finally ended. When the financial crisis of 2008 struck, it took us down to a much lower level economically. Thankfully, things have at least stabilized at this much lower level. For example, the percentage of working age Americans that are employed has stayed remarkably flat for the past four years. We should be grateful that things have not continued to get even worse. It is almost as if someone has hit the "pause button" on the U.S. economy. But things are definitely not getting better, and there are a whole host of signs that this bubble of false stability will soon come to an end and that our economic decline will accelerate once again. The following are 17 facts to show to anyone that believes that the U.S. economy is just fine...
The US non-recovery summarized in a nutshell: nobody can afford to buy anymore, so everyone is forced to rent. The result: homeownership rate plunging to 19 year lows, while median asking rents just soared to a new all time high. Thank you Ben Bernanke for the "New Normal American Dream."
The housing recovery is ultimately a story of the "real" employment situation. With roughly a quarter of the home buying cohort unemployed and living at home with their parents the option to buy simply is not available. The rest of that group are employed but at the lower end of the pay scale which pushes them to rent due to budgetary considerations and an inability to qualify for a mortgage. The optimism over the housing recovery has gotten well ahead of the underlying fundamentals. While the belief was that the Government, and Fed's, interventions would ignite the housing market creating a self-perpetuating recovery in the economy - it did not turn out that way. Instead, it led to a speculative rush into buying rental properties creating a temporary, and artificial, inventory suppression. While there are many hopes pinned on the housing recovery as a "driver" of economic growth in 2014 - the lack of recovery in the home ownership data suggests otherwise.
Welcome To The Blackstone Recovery: Over 11 Million Americans Spend More Than Half Their Income On RentSubmitted by Tyler Durden on 01/13/2014 16:47 -0500
As 11.3 million Americans spend more than half their income on rent, a record increase of 28% in four years, increasingly more are faced with the core "New normal recovery" choice: “We either eat, or we pay rent.” Welcome to the Blackstone recovery...