US Homeownership Rate Drops To 1995 Levels

Tyler Durden's picture

When it comes to the US housing market there appear to be three groups of people: those who who have either unlimited cash and/or access to credit, and like the most rabid of bubble-chasing speculators, are perfectly happy to engage in a game of Flip That House for a short-term profit pending the discovery of a greater fool (often times converting the house into rental properties as numerous hedge funds have been doing on cost-free basis courtesy of the government's REO-To-Rent program) - they are the vast minority of speculators; then there are those who currently rent and are opportunistically looking at home prices, willing to dip their toe at the right price - these too are few and far between and mostly represent a function of the natural growth of the US household offset by the availability of jobs; and then there is everyone else. Sadly, it is the "everyone else" that is the vast majority of the US population.

It is this "everyone else" that is once again being forced out of housing due to both the ramping bubble in housing prices making housing affordable primarily to those who buy with the intention of flipping, and due to the lack of available credit to those who actually need it (see sad state of commercial bank loans in the US).

Finally, it is this "everyone else" who comprises the bulk of those who have been kicked out of the American Dream, whose core pillar has always been owning your own home (with or without a massive mortgage attached), not renting.

As the US Census Bureau reported earlier today, the US homeownership rates in the first quarter of 2013 dropped by another 0.4% to a fresh 18 years low, or 65% - the lowest since 1995!

That this progressive, ongoing decline in ownership is taking place despite allegedly record home affordability is without doubt the most troubling feature of the economic "recovery" which has forced ever more Americans to shift away from owning and into renting, as can be seen by the next two charts showing the median asking rent and sale prices for vacant rent units and for sale units. While home prices have a long way to go still countrywide (excluding the occasional regional bubble market such as LA and NY), rents are already at record highs, which explains why it is every hedge fund's dream to become a landlord.

However, it is only a matter of time before zero-cost subsidized rental pass thru units owned by hedge funds who can therefore keep the rental asking price as high as they wish, forces out more and more Americans out of the Adjusted American Dream, where renting is the new buying, and leads to ever more people living in the streets.

Although, we are confident, it will be merely a matter of time before this, or some other administration, simply unleashes a "street living tax" - after all, "it is only fair" to apply austerity to hobos next. Because it has worked so well with the billionaires and trillionaires...

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camaro68ss's picture

Now more then ever is the best time to....aw F*** it!

knukles's picture

Well now, that sure explains the rise in prices... about as much as them massive gold sales creating them shortages of physical. 

hedgeless_horseman's picture

 

 

Google Trends...

"Home Defense" in BLUE

"Home Purchase" in RED

 

 

For Home Defense, Mrs. Horseman suggets a 12 gauge Benelli M2 Tactical shotgun, get the model with the ghost ring sights, and add an Urbino short stock from Mesa Tactical.

Also, do add a Surefire forend light, and tritium night sights for the irons. GG&G release plate and charging handle along with a +2 round Nordic extension tube and an Urban ERT sling and then you are good to go.

Nine (or even 12 or 15) .32 caliber 00 pellets with each pull of the 12 gauge's trigger is a reliable method for anyone to stop a big, powerful, motivated bad guy that is trying to kill you, or worse.

-------------------------------------------------------------------------

HOW LONG ARE THE SCREWS SECURING THE HINGES OF YOUR FRONT DOOR?

Go unscrew one and measure it now, friends. It will take less than one minute.

If they are less than 3 inches, or you do not have a good deadbolt, then you have a one-kick-door.

We will see how you do when a couple of vans loaded with bad hombres pull into your driveway and a moment later are all in your home with guns to your head.

http://www.kxan.com/dpp/entertainment/must_see_video/arizona-home-invasi...

We need to have our mind, body, and equipment ready at all times. We all need to work together to create an environment that is hostile to bad guys.

Don't EVER open the door for strangers. Always keep your doors locked, install door jamb armor with 3-1/2 stainless screws, always use the intercom when someone rings, always carry a weapon, and get the training and find the will to use it.

 

"An armed society is a polite society, " -Heinlein.

DaveyJones's picture

to 1995 levels...along with the price

tune in, turn on, drop out

SamAdams's picture

The HOUSING RECOVERY is in full swing!  I saw it on CBS just a week ago!  BULLISH!!!!

NeedleDickTheBugFucker's picture

They won't get past the M18 Claymores ring fencing the property.

Aeternus's picture

Of course homeownership rates are dropping, if large amounts of the populace don't have a job how could they possibly afford a home?

 

Wait, I have an idea, let's offer 100 year term loans at 0% and no money down! All in favor say Aye!

 

http://www.youtube.com/watch?v=fyklt01lN_I

onewayticket2's picture

This chart must not contain "intangible" homes....

Richard III's picture

Aye, verily: the road to serfdom winds through Suburbia.

DaveyJones's picture

that's only for the borrowers who are too big to fail

that's why so many are obese

NotApplicable's picture

So... do you give Tyler a cut of your youtube spam payola?

BraveSirRobin's picture

Such a fool. All yopu have to do is give a trillion dollar coin to everyone and then everyone can afford to buy a house. The solution is so easy, even the Ben Bernank and Paul Krugman can figure it out.

Stuck on Zero's picture

If you owe $500,000 on your mortgage and your home is valued at $410,000 are you really the owner?  The realy number I'd like to see is the value of all owner occupied property vs. the debt obligations.  It might be startling.

 

Troll Magnet's picture

I owe nothing on my house but this damn city keeps charging me $15,000 property tax every year. Do I still own "my" house?

Binko's picture

Of course not. The Government grants you a provisional, limited "ownership" stake in "your" house. But that can be revoked at any time for a number of different reasons. 

Groundhog Day's picture

If rates ever rise again, the winners wil be the renters who won't get stuck with a falling home price and a steadily increasing property tax bill.  The Hedge funds are not as smart as they think.  This is what keeps Ben Shalom up at night.  Rising rates when he loses control, unless of course Japan blows up first and crashes the whole thing, then he can blame it on the them

daveO's picture

Things will only 'blow up' if people switch to another currency. The Hedgies are working on the same assumption that has worked for all of the corporations since 1913. This is, that they will get their borrowed money at below market rates, thanks to the FED, and then exploit their built in advantage. They can get loans now, to buy houses that are still too expensive. They're banking on more hideous inflation down the road.

LawsofPhysics's picture

Just wait until it drops to 1840 levels, long sharecropping...

Power and control people, that is what this is really all about.

camaro68ss's picture

Was a slave shack counted as housing in 1840. I can see where that would skew the numbers.

knukles's picture

Depends upon whether it was a shotgun shack and how many slaves wuz crammed into it.  And whether it wuz painted white

Ghordius's picture

I thought that the state sponsored, Fannie/Freddie operated homeownership policies flanked by fiat powered budget deficits aided by global currency reserve status would count as... cental planning

from the comments it looks like a political holy cow, and a big one, too

WhyDoesItHurtWhen iPee's picture

I know someone who delivers mail pt time in my town.  He says the number of last names at an address has dramatically increased since '09.  Not uncommon to see 4-6 last names on a single address.  Also indicates more divorces. The extended family living in one home has returned (2-3 generations).

RobD's picture

Sample of one, my household now includes me, the wife, our two school age kids, my sister, and my wife's two grown nieces. Sister is on disability from her Toys R Us job, working on getting her SSD and has food stamps. The two nieces have jobs but don't make enough to afford rent on there own. Spot the recovery in my home lol.

Binko's picture

That seems to be the new norm. All around me I see my nieces and nephews in their late 20s and 30s living with parents, siblings doubling up, three generations in one home etc. Young people are looking at a future of 30 hr a week jobs at minimum wage. That's just enough for the simple amenities of life which only works because they are currently living rent and utilitiy free. 

America has embarked on a rapid transition to a future where the average person cannot make enough money to support a family, buy a car, pay taxes, take a vacation or save for retirement. The true nature of this is obscured becase we are currently living off pretend government money and the momentum of our past wealth. 

DaveyJones's picture

thanks, very cool statistic

a lot of the world lives like this and always has

lets see, oil took labor's place and the they've moved production elsewhere

guess it's all "coming back home" 

I Am Not a Copper Top's picture

No shit.  In that video of the "cops" searching for the Boston "bombers" in Watertown, they must have pulled a dozen people out of that one house.

NotApplicable's picture

I can't wait until I watch the city I live near start running these people out, since it is against the law for more than four unrelated people to live together.

j0nx's picture

haha sheeeit. That law exists here too but is unenforceable. Have tried to get the family next to me with 15 people living in that townhouse out of there before and they tell the city they are all related and that's the end of that. The city does NOT, repeat NOT investigate further or demand to see proof that they are all related. Once the vermin are in your neighborhood there is no getting them out. My hood is proof of that. It would be raciss after all. I have been suffering through this shit for the past 6 years with a neighborhood of 100 homes that went 50% occupied renters after the crash. Am finally to a point now where I MIGHT be able to sell for what I owe so I can GTFO of this town and never look back. House is on the market now and am hoping for solid contracts that get me to a break even point. I learned my lesson on real estate and location. It was epic how quickly this neighborhood and this town devolved into 3rd world status. Almost like they all sent out an SOS to rally at the town square and move into every possible house with as many of them as possible.

helping_friendly_book's picture

I bought a house for $31,000, 2100 sq. ft. three stories built in 1850's. Rooms were fucking huge. I put deadbolts on every door and rented rooms for $350/month all utilities included. There were six large rooms and my room, the smallest and I raked $2100/month while my expenses were arond $1000. I never made a mortgage payment because my roomates did. I sold the house at the peak of the bubble, thank god, pocketed $60,000 and bought a nice little house three blocks from the University Campus that I rent and pocket $300/month.

If I were 20 again I would go squat in some banks empty house, forge a lease, get the utilities cut on and do it all over again except this time I wouldn't own the hous. I would just collect the money.

Blankenstein's picture

j0nx -

What size city do you live in?  

Binko's picture

America the free? It's astonishing how many laws and regulations we live under. 

We are really just "free" to drive around and buy shit. Anything after that, at this point, is provisional on government approval. 

moneybots's picture

Yet in Los Angeles, home prices have jumped 50% this year according to another Zero Hedge posting, today.

Bay of Pigs's picture

Prices do not equate with ownership.

Millions of bank owned homes across the US are sitting empty.

Major Major Major's picture

There are also a lot of funds that have been buying up homes to rent. There are people forming new funds to do this as well, even with projected returns declining from where they were over the past couple of years. IMO majority of houses bought today are from these funds, people with cash that they need to stick somewhere and think that real estate is cheap and those who have been working towards buying something and are not going to let anything get in the way of that. The problem is that once these funds start to miss their projected cash-on-cash returns / IRRs, investors will be hesitant to continue this strategy. Also, once those with cash have bought a home or two or three, they probably won't want another. Lastly, the number of people (with jobs that show sufficient income - hard to buy without a loan) is likely on the decline.

Cathartes Aura's picture

it stands to reason that if fewer people are employed/waged, then fewer people will be able to afford the rentier class offerings. . . which means multiple income streams needed for each house-unit, "generational" style with families throwing in together, or "single" room style renting.

of course, the problems rise from there, crowding of adults can lead to discord, aka trashing the place.  landlords will all be chasing that gem of someone who can pass the credit/background check hoops with sufficient income to afford to play the amrkn game of "house 'n' cars 'n' stuff" - fewer players means the landlords will have to settle for derivative tenants, chasing after those .gov Section 8 "guaranteed" income streams. . . with less profits as repairs between evictions continue to rise.

people have yet to truly understand the "amrkn dream" style of existence sold as a package deal is over, adapt to survive is where it's at.

nothing is as easy as it was/seemed, before. . .

 

NickVegas's picture

Millions of bank owned homes acress the US are sitting occupied. 30 year, low interest, you start paying the principle really somewhere around year 17, and everyone and their brother has a renewable lien on the digs. It's like horse racing, or maybe closer to ratting. The ideal owner is a 20 something with a huge education debt, that is willing to go in the rat pit, and fight the other rats, and emerge victorious to deliver their piece of the pie to banksters. Young is better, they will keep fighting to deliver.

Whose woods these are I think I know.
His house is in the village, though;
He will not see me stopping here
To watch his woods fill up with snow.

My little horse must think it queer
To stop without a farmhouse near
Between the woods and frozen lake
The darkest evening of the year.

He gives his harness bells a shake
To ask if there's some mistake.
The only other sound's the sweep
Of easy wind and downy flake.

The woods are lovely, dark and deep,
But I have promises to keep,
And miles to go before I sleep,
And miles to go before I sleep.

 

Bay of Pigs's picture

Sorry, but most young people are not qualifying to buy homes now. 8 to 16M units are empty across the country.

Banks are simply keeping inventories low to boost prices. 

Major Major Major's picture

water, water, everywhere, but not a drop to drink.

BraveSirRobin's picture

"Millions of bank owned homes across the US are sitting empty."

Come on. This is hardly likely. I am sure those homes are filled with air, and likely some dust, as well.

Binko's picture

..and cockroaches, and transients, and drug paraphenalia, and rats.

Empty houses won't even stay houses for long if they were built in the last 10 years with ultra-cheap imported materials slapped together by cheap unskilled labor. 

Mojeaux18's picture

Yup. Because corporations are buying the houses, not families.  Families don't have the 100% cash on 25% over listing price that most places require. But don't worry, they'll let you rent it cheap (125% margin).

knukles's picture

Nobody in The People's Republic of California needs more than a kitchen, mattress and stool because the weather's always so nice.  Who'd ever want to spend tome indoors?  Hell, there's proof in the pudding as more and more people are electing to live outdoors, au naturel with just a bedroll and a few changes of clothes. 
Land of Opportunity, Social Justice and Free Shit for Everybody But You.

Cthonic's picture

Location, location.  That house would cost maybe $90k in TX

LawsofPhysics's picture

It helps to be close to the "free money".