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Mortgage Payments Rise To 40% Of Consumer Incomes: A Five Year High
Still think houses are extremely affordable? Still think rents, especially for rental stream-securitized offerings by Blackstone et al to widows and orphans , will continue rising in perpetuity? Think again. As the following chart from Bloomberg Brief shows, mortgage payments as a % of average consumer incomes has risen to 40%, up from the higher 20% as recently as a year ago, is still rising, and is now back to levels last seen in 2008.
Bloomberg has more:
The average monthly mortgage payment Mortgage Payments Now 40 Percent of Average Consumer Incomes for a new home in the U.S. rose by $300 between December and August, providing a potential red flag for U.S. Federal Reserve officials debating when to reduce their special asset purchases. The rise was due to a combination of rising home prices and mortgage rates.
In August an average monthly mortgage payment of $1,287.57 equates to about 40 percent of consumers’ average income, up from 31 percent in December, placing additional strain on household finances. While this jump is substantial, it is still far below the housing bubble peak of 65 percent registered in June 2006.
Yes, it can go higher. And it will. What is most ironic is that it desperately has to, at least according to boththe TBAC, Wall Street and the Treasury. Recall from the May TBAC presentation:
Simply stated, the Fed is desperate for housing to return to its status as a source of "high quality collateral", hence repoable credit money, instead of a byproduct of cheap credit affordable only to the 1%. It is then and only then that the Fed can even consider to withdraw, and explains also why the Fed needs a housing bubble. After all, without the broader US population scrambling en masse into housing, there can by definition not be a bubble. Sadly for the Fed, the incipient housing bubble seems to have already popped, which is why a brand new concerted effort to make housing, paradoxically, less affordable and thus more disrable, is coming down the line, and why more and more people realize that Yellen's first flow adjustment will not be down but up.
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No, there still is one tool left, and he is running the FED.
It doesn't really matter that consumers spend more on their houses, we have WS firms readying their REITs so that all US citizens (serfs) can take part in the great housing industry that is in the US via purchasing WS Reits, at an obnotious fee, or course..... <s>
ECHO, ECHO, echo bubble...
Americans take right after the government. Or is it the other way around?
My home on Zillow which I understand is just an estimate is worth exactly 7k less than I paid for it in 1998. I have done nothing but home repairs, maintainance and paying of property taxes since. Two new swimming pool liners, one new roof all interior painting, new carpet throughout, etc. You all get my drift. I pay into retirement plans for the county parks workers, the librarians, the school teachers, county sheriffs, forest preserve park district workers etc, etc etc. Home ownership is nothing but a bankers wet dream come true. Oh, and property taxes here in the suburbs of Obamaville on a 170k house, just 6300 a year. Who is paying into my retirement account? Me alone. I think we will get to a place where there are three classes of people in our country. Non productive, government employees of all levels and we who work. It won't end well. Oh, and for those who think they own their home when they pay off mortgage, try to stop paying taxes.
I counted only two classes of people in your list :)
Fred
Yeah, it's a bitch but I like having the house paid off so as I'm not contributing interest to the banks. Sure I've got a chunk of capital I can't pick up and move but I like my house, where it is, how it fits the family and don't want to rent. Hard to find houses for rent that fit families with four kids. Maybe I sould mortgage the house up and buy ten pound of gold?
Ah well, fuck it. Only so much worrrying one can do. Gonna take the kids shooting today as they're off school. Gotta make sure their practice is up.
30% at low mortgage rates. this ends well?
One question - when is liquid private collateral a bad thing?
like your style, on rereading my post I have to agree with you Fred. And to DrDolittle,,, shooting skills can always be more honed, good for you with the kids shooting today. I took a nice 8 point buck with a bow last Thursday and shooting skills will always be important in my house. Matter of fact the Mrs Deerhunter is a much better pistol shot than I will ever be. Safe shooting to you.
We must be soooooooo smart, having learned NOTHING from the lessons of history!
You pay the rent, get the govt to pay the rent, or get your ass out of my house.