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.