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US Rents Rise To New All-Time High; Homeownership Rate Stuck At 18 Year Low

Tyler Durden's picture




 

One quarter ago, when we performed our regular update on trends in US homeownership and rents, we said that "The American Homeownership Dream is officially dead. Long live the New Normal American Dream: Renting." What happened since then is that the American Dream briefly became a full-blown nightmare when in Q3 mortgage rates exploded, pummeling the affordability of housing, and ground any new mortgage-funded transactions to a complete halt (don't believe us - just ask the tens of thousands of mortgage brokers let go by the TBTF banks in the past 6 months). Which is why it was not at all surprising to find that the just updated Q3 homeownership rate has remained stuck at 65.1%: the lowest since 1995.

And yet, even though household formation has continued to implode (more on that in a subsequent post) despite the shrill promises of housing bulls who still have to realize that the transitory pick up in home prices has nothing to do with organic growth or a stable consumer, and all to do with the Fed's balance sheet, the now effectively finished REO-To-Rent program, and illegal offshore cash paked in the US, Americans have to live somewhere. That somewhere is as renters of Wall Street and other landlords. As the next chart shows, the median asking rent has once again risen in Q3, this time by just $1 from $735 to $736 per month.

Luckily Owner Equivalent Rent is largely adjusted (hedonically) by the Fed in its CPI calculation making it seem quite friendly, or else its all time highs may give the impression that inflation is not quite as dead as the Fed portrays it.

But what is perhaps more notable is that even asking rents are starting to roll over in almost all parts of the country except for the Northeast.

Finally, why are any of these upward trends in significant jeopardy? Because while the 0.01% are getting wealthier by the day, everyone else... isn't. As can be seen on the chart below.

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Tue, 11/05/2013 - 14:25 | 4123461 LawsofPhysics
LawsofPhysics's picture

Ah yes, the success of the "rentier" society.

This should end well (and remember the bastille)...

Tue, 11/05/2013 - 14:56 | 4123583 icanhasbailout
icanhasbailout's picture

hoocoodanode?

Tue, 11/05/2013 - 15:19 | 4123646 Ying-Yang
Ying-Yang's picture

"The American Homeownership Dream is officially dead."

The FED can rent out all those houses inside their MBS... /sarc

Tue, 11/05/2013 - 15:22 | 4123661 Dareconomics
Dareconomics's picture

The situation is worse than depicted.  Rents are actually much more expensive,  because real incomes have fallen during the time period in question.

 

http://dareconomics.wordpress.com/2013/11/05/around-the-globe-11-05-2013/

Tue, 11/05/2013 - 15:31 | 4123699 NihilistZero
NihilistZero's picture

It's a bullshit statistic because it's ASKING rents.  And even taking into account the median most of the new rental inventory is urban where rents are always going to be higher.

Ask the local land lords what their cap rate and occupancy rates are looking like.  That picture ain't so rosy...

Tue, 11/05/2013 - 15:47 | 4123766 Kickaha
Kickaha's picture

Your anectodal experience is not unexpected.  My own observations are that as jobs disappear, people are gravitating to where the few available jobs exist, and that is near urban centers.  Also, people who used to be content to commute long distances to nice jobs have seen their salaries and benefits cut tremendously to the point where they have lost their fringe suburban homes to foreclosure and then moved closer to work to avoid the commuting costs they can no longer afford.  Finally, much of the shuttered businesses were small operations opened up by guys on the fringes of urban areas close to their idyllic homes, and small business has really taken it on the chin due to an inability to purchase legislators when they come up for auction during elections.

Tue, 11/05/2013 - 15:48 | 4123774 cbxer55
cbxer55's picture

"inability to purchase legislators when they come up for auction during elections."

 

LOL!  Sad, but oh so true! 

Tue, 11/05/2013 - 16:09 | 4123867 Jumbotron
Jumbotron's picture

"Your anectodal experience is not unexpected.  My own observations are that as jobs disappear, people are gravitating to where the few available jobs exist, and that is near urban centers.  Also, people who used to be content to commute long distances to nice jobs have seen their salaries and benefits cut tremendously to the point where they have lost their fringe suburban homes to foreclosure and then moved closer to work to avoid the commuting costs they can no longer afford."

We might as well start building worker dorms like the Chinese.

 

http://places.designobserver.com/media/images/pai-guangdong-9_525.jpg

http://assets.sbnation.com/assets/1448921/vtech-workers-sleeping.jpeg

http://i.dailymail.co.uk/i/pix/2010/06/11/article-1285980-09FFBFAD000005...

http://l.yimg.com/bt/api/res/1.2/QaUWSJCtKz0FbwXz_tnwfA--/YXBwaWQ9eW5ld3...

http://www.stjobs.sg/career-resources/upload/article/98912__1357810593.jpg


Tue, 11/05/2013 - 16:22 | 4123920 Bobbyrib
Bobbyrib's picture

While walking back to my apartment, I saw people clamoring around tables selling winter clothing dirt cheap (gloves for $1 and sweaters for $3). I immediately though to myself manufacturing in the US will never compete as long as the sheeple keep buying cheap third world mass produced garbage.

Also when I walked by a popular thrift shop a few days before that, people were waiting on line to sell their clothing for what looked like hours. There seems to be a supply glut.

Tue, 11/05/2013 - 17:25 | 4124199 gorillaonyourback
gorillaonyourback's picture

So i lve in in upscale burb near san diego and while at my coffeee shop i was in a conversation with a young women about 20 behind the cash register. Here was the gist ; she makes 8$/hr she shares room with her girlfriend she pays 500/month for a half bedroom in a 2 bedroom apt. She planning moving back home. Many people here are leaving because of the cost of living. Rents are finally starting to crack i saw a 2 bedroom for 1700 a month thats what it was 5 uears ago.

Tue, 11/05/2013 - 15:57 | 4123814 Freddie
Freddie's picture

F this and F renters.  Try owning something.   You pay through the arse on taxes, water, garbage and the list goes on.    You pay for those golden pension for the cops, fire, city and county workers.

Tue, 11/05/2013 - 16:20 | 4123902 cornedmutton
cornedmutton's picture

F renters? As someone who's NEVER "owned" a home since I've been continuously priced out of the market since my start in 2001, I have to say, FUCK YOU.

You think you "own" your home?  Stop paying taxes and see what happens.  Either you pay the King's Men or they take back that land and home you think is yours.

It's not yours.  It's the government's.  You just take care of it and assume all liability until such time as you can no longer afford to.  At that point, it is taken from you and "sold" to someone else.  Rinse, repeat.

And as for payments to the city/county/manicipality...do you really think these costs are not included in the cost of rent and passed along to the renter?  I suppose you think corporations pay taxes too.

Oh, yeah...almost forgot...GO FUCK YOURSELF.

Tue, 11/05/2013 - 17:29 | 4124219 gorillaonyourback
gorillaonyourback's picture

Well f you for takin it up the ass lololol sry i dont feel your pain.

Tue, 11/05/2013 - 20:20 | 4124901 InvalidID
InvalidID's picture

 

 I gotta get in and double what corn said up there. Pay out the ass? WTF do you think renters pay for? You think a guy renting a house insn't paying for the taxes, water, garbage, and the list goes on, plus profit to the fucking landlord? Are you fucking retarded? FFS, did you work for Bear Stearns or something?

Tue, 11/05/2013 - 16:01 | 4123828 Handful of Dust
Handful of Dust's picture

As more and more renters wake up and realize they don't need to actually pay that rent it's going to uglier yet.

Look how many house sitters there are not paying their mortgages and living rent free. Courts are clogged and landlords are overwhelmed. Of ocurse, banks ha ve no incentive to evict since they are handed almost free money from Ben.

Tue, 11/05/2013 - 15:25 | 4123674 CrashisOptimistic
CrashisOptimistic's picture

Interesting tidbit.  Definition of homeownership rate.  It is NOT the % of adults living somewhere who own their abode.  Rather:

 

"The homeownership rate is computed by dividing the number of owner-occupied housing units by the number of occupied housing units or households."

 

IOW it's the number of houses occupied by owners rather than renters.  This is NOT the number of people of a given age who own where they live.

 

 

Tue, 11/05/2013 - 16:54 | 4124031 TheGardener
TheGardener's picture

Posted this before, on a bank questionnaire once in Asia
they asked about assets : What are your assets except your primary residence ? Do you own your primary residence or is it rented/mortgaged ?

Rented or mortgaged one of the same affliction!

Tue, 11/05/2013 - 15:21 | 4123663 BKbroiler
BKbroiler's picture

I have an apartment for rent in the East Village section of Manhattan, a pretty nice part of town close to NYU.   It is 10X 6 (yes, 60sf), has no kitchen, shares a bathroom in the hall, and is currently renting for $1095.  The future is bleak folks and it looks a lot like that.

Tue, 11/05/2013 - 15:28 | 4123686 Trimmed Hedge
Trimmed Hedge's picture

At least it's not $1,100...

Tue, 11/05/2013 - 15:34 | 4123704 Skateboarder
Skateboarder's picture

No windows, am I correct? Guessing the window units go for double.

Tue, 11/05/2013 - 15:40 | 4123737 cbxer55
cbxer55's picture

Windows? Windows? We don't need no stinkin windows!

Especially if you live in Manhattan. What are you going to look at anyhow? The building right outside your window! 

Tue, 11/05/2013 - 16:24 | 4123929 BKbroiler
BKbroiler's picture

brick wall views come standard

Tue, 11/05/2013 - 15:39 | 4123716 CrashisOptimistic
CrashisOptimistic's picture

Okay, look, man.  Is there any imaginable disaster scenario that leaves Manhattan intact while destroying Iowa?  Are there any food riot scenarios that say "everyone on Manhattan will be fine, but if you live in rural farmland Pennsylvania you will starve"?

Or how about nuclear attack or biological warfare attack.  Do you think the target will be Nebraska farmland rather than Manhattan?

You're posting during the day.  You don't work on Wall Street and are thus not locked into living there.  So . . . don't live there.

Tue, 11/05/2013 - 16:39 | 4123950 BKbroiler
BKbroiler's picture

I'd rather be where the action is when TSHTF.  I'm one of the few here who is prepared.

Tue, 11/05/2013 - 16:46 | 4124009 ShorTed
ShorTed's picture

All of that in a 60 square foot apartment?  Jeez, must be high ceilings.

Tue, 11/05/2013 - 17:09 | 4124123 TheGardener
TheGardener's picture

I`m with you broiler, I just moved back to where the imperialistic action is from the third world, being tired of watching globalization from the losing sight.

Being out and there I`m utterly ill prepared I presume.

Tue, 11/05/2013 - 15:46 | 4123757 MeMadMax
MeMadMax's picture

Damn dude, you renting a Jail Cell?

lol

Tue, 11/05/2013 - 17:11 | 4124132 Freddie
Freddie's picture

NYC is a jail cell.

Tue, 11/05/2013 - 15:45 | 4123760 mrdenis
mrdenis's picture

Bathroom down the hall ? ....what do I tell my guests ? 

Tue, 11/05/2013 - 15:50 | 4123786 cbxer55
cbxer55's picture

Tell them to make sure they use an ass gasket. ;-)

Tue, 11/05/2013 - 16:02 | 4123843 Handful of Dust
Handful of Dust's picture

Tell them to avoid Escobar's Diner.

Wed, 11/06/2013 - 10:34 | 4126658 SokPOTUS
SokPOTUS's picture

Tell them to sh*t the bed.

Tue, 11/05/2013 - 15:53 | 4123797 roadhazard
roadhazard's picture

You should be so proud.

Tue, 11/05/2013 - 17:29 | 4124225 BKbroiler
BKbroiler's picture

What do I care?  I wouldn't live in that shithole, just one of many listings.

Tue, 11/05/2013 - 16:13 | 4123877 Jumbotron
Jumbotron's picture

We ALL pay rent.  If you own property you pay property tax.  You rent from the government.  If you have a mortgage you pay rent on the money to the bank.

Their is NO such thing as ownership......except your mind.

Tue, 11/05/2013 - 16:20 | 4123917 LawsofPhysics
LawsofPhysics's picture

Right, how's that working out for greece again?  Try to think a bit harder and recognize that "laws" that cannot be enforced are not "laws" at all.

Tue, 11/05/2013 - 16:32 | 4123958 Jumbotron
Jumbotron's picture

"laws" that cannot be enforced are not "laws" at all.

Ask Greece as a country if they have stopped paying rent on money (interest) to the Euro banks.  There...fixed it for you.

Let me fix it a little more for ya....

Laws that cannot be enforced.....yet.

They always get back around to it.

Tue, 11/05/2013 - 17:41 | 4124272 LawsofPhysics
LawsofPhysics's picture

Wake us when they do.

Innovative people find ays around everything.  try it, you might like it.

Sounds like you need a new tax attorney.

Tue, 11/05/2013 - 18:13 | 4124424 Jumbotron
Jumbotron's picture

LOL !

You must go in for one of those "put everything into a trust" schemes.

Whatever.  You use money don't you.  Then you pay rent.  Whatever cash or digital bits in your account have rent taken out due to currency manipulation and printing.

You're not that smart.

 

Tue, 11/05/2013 - 18:29 | 4124496 TeMpTeK
TeMpTeK's picture

theres always "allodial title" if u can get it....

Tue, 11/05/2013 - 19:12 | 4124642 Nobody For President
Nobody For President's picture

Jumbo, when you said:

"Their is NO such thing as ownership......except your mind."

You were right, but not in the way you meant it.

I bought 40 acres of pretty decent ridge/timber land some 40 years ago - but I didn't really buy the land. I bought the right to care for it for the rest of my life - a distinction I have never forgotten. Planted a lot of trees, made my immeadiate homestead area (about 2 acres) reasonably fire safe, now I mostly try to enjoy the fruits of my labor. (Shitload of apples this year, speaking of fruits. The peas, tomatos, and strawberries came in big time as well.) Sure, I pay taxes on the land and the buildings I have built, so what? You think there are no taxes in your rent money?

I have a place that is mine, because I built it. And I love this land, and plan to die here. I doubt you can feel that way about a place you rent - my parents rented all there lives, and had nothing but a trailer to show for it at the end of their lives - my Dad died in it. Fuck that.

I love this place. The other country boys on the list know what I am talkin' about. If you don't get it, I will suggest you are missing out on a big part of what it can be to be human.

Different strokes... 

Wed, 11/06/2013 - 15:27 | 4127977 Jumbotron
Jumbotron's picture

Jumbo, when you said:

"Their is NO such thing as ownership......except your mind."

You were right, but not in the way you meant it.

I bought 40 acres of pretty decent ridge/timber land some 40 years ago - but I didn't really buy the land. I bought the right to care for it for the rest of my life - a distinction I have never forgotten. Planted a lot of trees, made my immeadiate homestead area (about 2 acres) reasonably fire safe, now I mostly try to enjoy the fruits of my labor. (Shitload of apples this year, speaking of fruits. The peas, tomatos, and strawberries came in big time as well.) Sure, I pay taxes on the land and the buildings I have built, so what? You think there are no taxes in your rent money?

I have a place that is mine, because I built it. And I love this land, and plan to die here. I doubt you can feel that way about a place you rent - my parents rented all there lives, and had nothing but a trailer to show for it at the end of their lives - my Dad died in it. Fuck that.

I love this place. The other country boys on the list know what I am talkin' about. If you don't get it, I will suggest you are missing out on a big part of what it can be to be human.

Different strokes...

Not really.....I don't rent.

Not to get into a pissing contest on land (my 5 acres can't compete with your 40) but I "own" free and clear.  Forested all around my property.....have about a 2 of the 5 acres forested inside property lines.  I have apples, oranges....not enough time since moving out here for other veggies and fruit yet.....but the chickens are producing a shit load of eggs and deer meat is coming as soon as they step back onto the property.

The horses are doing fine and all the kids (5) and the wife and I ride 'em all around.

However.....just sent a check to county for their $1,300 yearly property rent.  You did too.

Paid $350 in power company rent....but that's going to go away for the most part as I am going solar next year.  You paid rent on your power too unless you are off grid.

Both you and I did not make the land......God did.  So you don't own it.  And that land was stolen from the Native Americans (my forefathers...I'm descended from Chickasaw) by our white forefathers.  So you don't have clear title.

Once again.....you and I don't own shit.  Never have....never will.

And when you die.....you can't take any of that shit you don't "own" with you.  So in the end.....you will be maggot food just like your parents.....with nothing but a casket for your home just like your parents.

Drop the pride my friend.  Drop the delusion of ownership.  Embrace the truth.  We were all born into and will die on Prison Planet.

Only truth and God can set you free.  Why don't you "own" that.

Tue, 11/05/2013 - 18:37 | 4124530 DosZap
DosZap's picture

And just what anhd where can you rent anything worth living in for $736.00 a month in the USA?.

Tue, 11/05/2013 - 14:23 | 4123463 Ahmeexnal
Ahmeexnal's picture

Purge of US military continues. High ranking officers who accept to shoot US citizens stay, those who refuse are being fired:

http://beforeitsnews.com/obama/2013/11/obama-fires-yet-another-commander...

Tue, 11/05/2013 - 14:42 | 4123538 yogibear
yogibear's picture

Dept of Homeland security has to use those billions rounds of recently purchased rounds for something.

Convert the political and military system to a unified entity.

Tue, 11/05/2013 - 15:56 | 4123811 Alcoholic Nativ...
Alcoholic Native American's picture

seal team sixed!  National Geographic should make a documentary 

Tue, 11/05/2013 - 14:25 | 4123470 slotmouth
slotmouth's picture

All those poor people who are struggling to meet these rent payments surely have the rest of their income in the market though, so it all evens out.

Tue, 11/05/2013 - 15:21 | 4123654 duo
duo's picture

rent up 2.5x in 23 years, that's 4% a year compounded.

Tue, 11/05/2013 - 14:25 | 4123475 10mm
10mm's picture

Ownership was and is a lie.

Tue, 11/05/2013 - 14:30 | 4123492 LawsofPhysics
LawsofPhysics's picture

Bullshit.  Kinship/blood remains thicker than water and when fraud is the status quo possession is the law.

 

don't believe in "ownership", stop paying your rent, or better still, stop paying your taxes...

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