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Rents Soar To Record High As Homeownership Rate Plunges To 19 Year Low

Tyler Durden's picture




 

Each quarter, when we perform our regular update on trends in US homeownership and rents using Census Bureau data, we say that "The American Homeownership Dream is officially dead. Long live the New Normal American Dream: Renting." One thing we added in 2013 is that the American Dream has now officially became a full-blown nightmare after mortgage rates exploded, even if declining modestly afterward, and in the process pummeling the affordability of housing as well as grounding 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) while sending mortgage origination activity to record lows. Which is why it was not at all surprising to find that the just updated Q1 homeownership rate was 64.8% - the lowest in 19 years!

 

Furthermore, even as 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 parked 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 soared to fresh records and hitting an all time high of $766 as of the first quarter.

 

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. Although don't tell that to renters in the Northeast, where the average rent just soared to $1,043, a record increase of 16%, or $147 compared to a year ago.

At least one entity is enjoying this wealth extraction from the middle class which no longer being able to afford buying a home is forced to hand over an ever greater portion of its paycheck to America's largest landlord - Wall Street's very own Blackstone.

 

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, 04/29/2014 - 10:57 | 4707730 Haus-Targaryen
Haus-Targaryen's picture

I think we could materially increase home ownership rates if the Federal Government would subsidize and guarantee mortagages for people who wouldn't qualify for a home loan otherwise.  I know this is a new idea, but I think it might just do the trick. 

Tue, 04/29/2014 - 10:59 | 4707735 RSloane
RSloane's picture

Brilliant idea! What could possibly go wrong?

Tue, 04/29/2014 - 11:00 | 4707741 SilverIsKing
SilverIsKing's picture

Everyone does have the right to own their own home so your proposal seems like a good idea.

Tue, 04/29/2014 - 11:10 | 4707761 lordylord
lordylord's picture

Ever hear of Freddie Mac?  How about the Community Reinvestment Act?  Don't you know the government ALWAYS makes things worse (usually by design).  The tax-payer should not subsidize this nonsense.

Tue, 04/29/2014 - 11:12 | 4707783 NoDebt
NoDebt's picture

You missed the sarcasm.  Try to keep up from now on.

Tue, 04/29/2014 - 11:13 | 4707788 SilverIsKing
SilverIsKing's picture

Thank you.

Tue, 04/29/2014 - 11:53 | 4707982 Latina Lover
Latina Lover's picture

You know the rental market is tight when the homeless are competing for the best places to live a bridge.

 

 

http://inhabitat.com/nyc/homeless-people-are-moving-onto-the-manhattan-b...

Tue, 04/29/2014 - 12:02 | 4708031 nope-1004
nope-1004's picture

Wonder if MDB's mom will see this chart and raise the rent for the basement suite?

 

Tue, 04/29/2014 - 12:17 | 4708085 Oh regional Indian
Oh regional Indian's picture

Graduating students housing options:

1) Let's share, it's so much fun to live with 7 people, 4 of whom you cannot stand.

2) Tiny place on the wrong side of the tracks, 2 hours away from work

3) Your childhood bedroom

4) Basement below said room (mom is renting out yours to make up for SS being tied to a CPI that excludes food and gas)

5) Couch surfing (my favourite)

that is quite an option set.

 

I knew a gent in NorCal who was buying up apartments in 2001-3 when single family was all the rage. Guy had foresight. He spoke of this time, confidently, then.

Interesting thign is to see India follow this loop, almost tick for tick...only 10 years after and far more messily...

http://aadivaahan.wordpress.com/2010/07/13/whither-india/

Tue, 04/29/2014 - 13:18 | 4708483 HardAssets
HardAssets's picture

Hmmm. . . maybe swinging and group 'play' will be in vogue again like in the 60s and 70s

But now it will be primarily for the purpose of sharing limited bed space with as many people as possible to 'spread' the costs (so to speak)

Tue, 04/29/2014 - 11:16 | 4707800 lordylord
lordylord's picture

Sorry everyone!  I hear so much "fair share" bullshit around the NYC area, that even obviously sarcastic remarks seem like genuine Statist talking points.

Tue, 04/29/2014 - 11:35 | 4707896 JMT
JMT's picture

The area really sucks now (if you are not under 35 and in the top 2%).. I have to come to NYC for business once or twice a month. After around five days I just want to get the hell out..  I don't anyone over the age of 35 (who isn't in the top 2%) who was born in the area and hasn't moved out. 

Tue, 04/29/2014 - 21:23 | 4710328 Old Poor Richard
Old Poor Richard's picture

They ARE genuine statist talking points.  I'm sure you can find articles advocating a resurgence of no income verification loans on huffingtonpost and salon.com.  Progressives are parodies of themselves, and you have to use context to figure out when it's real and when it's satire. 

Tue, 04/29/2014 - 11:12 | 4707785 pods
pods's picture

I do declare that Opposite Day is officially open.

MDB will now have to be the lone critic of our unicorns and skittles system, unless Methman made it out of rehab.

pods

Tue, 04/29/2014 - 16:32 | 4708440 HardAssets
HardAssets's picture

pods:  "I do declare that Opposite Day is officially open."

Maybe George Costanza could be the Patron Saint of Opposite Day ?

https://www.youtube.com/watch?v=_vyb5dkQZPw

 

Tue, 04/29/2014 - 11:19 | 4707825 max2205
max2205's picture

Does EBT now include rent?

 

Movin on up to the East Side.....

Tue, 04/29/2014 - 11:26 | 4707862 NOZZLE
NOZZLE's picture

How the fuck do people not get the sarcasm in this?  I see this all the time on this board, obvious sarcasm that blows right over readers heads causing them to downarrow a legitatimate comment.

Tue, 04/29/2014 - 11:33 | 4707879 lordylord
lordylord's picture

"How the fuck do people not get the sarcasm in this?"

The only way to read sarcasm in his comment is to identify it as so outlandish that it must be sarcastic.  The problem is that it doesn't sound like an outlandish statement.  It sounds as though it is a genuine Statist talking point. Sad, I know.

Tue, 04/29/2014 - 11:34 | 4707886 Kreditanstalt
Kreditanstalt's picture

Because he's right.  There ARE a lot of statists and socialists here, always screaming about "the evil rich", how taxes on everyone but themselves should be raised, how social programs should be expanded, how wonderful the government is...&c., &c.

Tue, 04/29/2014 - 12:04 | 4708046 sleigher
sleigher's picture

Well, maybe if we expand those social programs infinitely we will come out the other side all good.  Like drinking yourself sober.  </sarc>

Tue, 04/29/2014 - 12:14 | 4708100 Kayman
Kayman's picture

NOZZLE

Now you're being sarcastic.

Tue, 04/29/2014 - 11:07 | 4707760 imapopulistnow
imapopulistnow's picture

Of course they should be charged a higher interest rate and have larger monthly payments, but if we pool these loans and securitize them, the default rate is essentially zero.  A great investment for global municipal pension funds!!!

Tue, 04/29/2014 - 11:27 | 4707775 lordylord
lordylord's picture

Don't you know that rising home prices is a GOOD thing???  The more people who can't afford homes because of easy hot-off-the-presses money floating around, the better!   Just like FDR who thought that the depression was caused by falling prices.  What a bunch of thieving central planners. 

Tue, 04/29/2014 - 11:49 | 4707964 HardAssets
HardAssets's picture

And the real money isn't even in the stupid houses. Naw, that's just an excuse. The Real Money is in all the new 'financial products' that we can leverage using those stupid houses. We'll tell all the dummies out there that 'your house is your greatest investment' and they'll eat it up. We could care less if its houses, no earnings internet stocks, or freakin' tulips.

Tue, 04/29/2014 - 16:41 | 4709338 neidermeyer
neidermeyer's picture

We could securitize the whole shebang ... but keep the shares in streetname in our vault.. that'll let us write insurance on it as if we own it ,,, many times over since all the deals will be private. THIS WILL WORK!

Tue, 04/29/2014 - 11:06 | 4707744 lordylord
lordylord's picture

"the Federal Government would subsidize and guarantee mortagages"

Your first mistake was thinking government can interfere and improve the situation.  Government is the problem, not the solution.

Ask yourself, why is a shit-box in NJ that I wouldn't even pay 100K listed for 400-500K? 

Tue, 04/29/2014 - 11:07 | 4707764 pods
pods's picture

pssst, it's sarcasm.

Tue, 04/29/2014 - 11:11 | 4707778 lordylord
lordylord's picture

Darn.  Now I read the sarcasm.

Tue, 04/29/2014 - 11:36 | 4707898 Kreditanstalt
Kreditanstalt's picture

"...why is a shit-box in NJ that I wouldn't even pay 100K listed for 400-500K?"

Because, due to the constant counterfeiting of money & credit 400-500K is the same amount as 100K was a few years ago...

Tue, 04/29/2014 - 11:55 | 4708000 HardAssets
HardAssets's picture

For a real eye opener take a look at the receipts of items you bought years ago. I have many items that I left the receipt in the box and its just about always a shock at how high prices have gone. There are many items that I just wouldn't buy today because of the current price. I find myself saying "I'm glad I bought it back then."

Tue, 04/29/2014 - 12:00 | 4708023 Kreditanstalt
Kreditanstalt's picture

And a whole lot of stuff I paid ridiculous prices for ten or twenty years ago NEW and now find second-hand for 25 cents...LPs, appliances, books, tapes, household stuff...

I'll never pay retail for anything new again.

Tue, 04/29/2014 - 12:24 | 4708127 HardAssets
HardAssets's picture

Yes, that's a good point. It is a good time to be creative. A 20 yr old nephew of mine gets a lot of his clothes at thrift stores. Really nice stuff for next to nothing. Last winter I asked him about a really nice down jacket that he was wearing. He told me he bought it the previous August in a thrift store for $5. Retail it would go for $300. (And years ago when I lost a lot of weight, I gave away a lot of very nice, new, unworn slacks that still had their tags & labels.) My brother is a contractor and has gotten an electronic keyboard, oak desks, etc from people for free. They were happy that someone would cart it away to free up some needed space.

Americans have filled their homes with a lot of junk. For many 'shopping' is a major form of entertainment/diversion. There's so much of this junk that we have to rent out storage space to store the overflow. (I'm guilty of this myself).  Maybe we'll be forced back to the kind of common sense thinking that our great-grandparents practiced.

Thu, 05/01/2014 - 15:14 | 4717185 shiftless
shiftless's picture

Last year I was sentenced to a week of 'community service' (forced labor) for violating one of the king's bullshit laws. They sent me to the 'transfer facility' which is where people drop their trash to be crushed and shipped away. Day after day, all day long people will throw away perfectly useful stuff. Could not even begin to tell you the number of perfectly working microwaves, TVs, stereos, musical instruments, furniture, books, wood, insulation, mirrors, computers, electronics, etc, etc, etc which people were throwing out.

Sometimes you could tell people felt guilty about it and they tried to give stuff away to us helpers. The first day I loaded my truck bed with all kinds of goodies. Got two perfectly working Coleman camp stoves (with a full tank of fuel!), a couple good chairs, some speakers, a 21" CRT computer monitor, some fireplace logs, a couple pieces of plywood, and all kinds of other useful items. The next day the bitch in charge griped me out and said we were not allowed to take ANYTHING. I still took stuff anyway over the next few days and ended up in a yelling match with the bitch in the parking lot, who cussed me out acting like I was the worst scum of the earth.

I'm like, you really think I'm going to apologize and feel bad for saving good stuff from the crusher? Fuck you. If I had it all to do over again I'd have taken twice as much. Can you imagine the reaction of a typical third worlder from any country if he could see all this going on? He wouldn't believe anyone could be so stupid to throw out all this good stuff.

Tue, 04/29/2014 - 12:19 | 4708132 TheFreeLance
TheFreeLance's picture

Related -- Been in a low-intensity conflict with my insurance guy over rising rates. Personal property policy has gone up about 10% a year past 3 yrs. He keeps telling me how much less I am paying than other people. Finally pulled together the TOTAL I paid for all insurance 08-09 to compare to now, same coverage, same company, ZERO claims -- up about 35%. And I've shopped around, other carriers are even higher. Straight up collusion.  

Tue, 04/29/2014 - 13:18 | 4708487 Uncle Remus
Uncle Remus's picture

Big time. Bastards.

Tue, 04/29/2014 - 12:56 | 4708365 mrdenis
mrdenis's picture

I live in NJ ,the best part is our politicians keep raising property taxes all the while telling our homes are worth so much ,my PT are now over 25K on a 2900 sq ft home ,no updates in 30 years .which my taxes were 3500.

Tue, 04/29/2014 - 13:17 | 4708478 Uncle Remus
Uncle Remus's picture

Transgenerational mortgages - read the fine print on your birth cert. Hey, we're pushing 15 years on auto loans...

Tue, 04/29/2014 - 10:59 | 4707732 idea_hamster
idea_hamster's picture

I, for one, welcome my new Hedge Fund landlords.

A bit of enclosure of public lands, a bit of rent hikes, and we'll all be living in a Jane Austen novel.  OK, so we won't be any of the title characters, but who wants the pressure of "society"?

Tue, 04/29/2014 - 11:00 | 4707738 idea_hamster
idea_hamster's picture

*Jane Austen

Sorry -- I mis-typed "Charles Dickens."

Tue, 04/29/2014 - 12:44 | 4708304 IridiumRebel
IridiumRebel's picture

I can be a lowly street urchin!!

Tue, 04/29/2014 - 13:28 | 4708534 HardAssets
HardAssets's picture

IridiumRebbel: I can be a lowly steet urchin!!

 

http://www.youtube.com/watch?v=hEQDllvuy1I

Tue, 04/29/2014 - 11:12 | 4707782 Ignorance is bliss
Ignorance is bliss's picture

Can I be the butler? I've always wanted to push around my staff.

Tue, 04/29/2014 - 10:59 | 4707737 Sudden Debt
Sudden Debt's picture

rents go up but living spaces go down.

When I see what young people pay for such small appartments... it's just nuts.

 

Tue, 04/29/2014 - 11:17 | 4707804 pods
pods's picture

I prefer to call it cozy.

Going to go garbage picking looking for a long dresser in which all my friends can sleep in.

Our new system of awesome is just that, awesome!

pods

 

Tue, 04/29/2014 - 11:48 | 4707958 Ignatius
Ignatius's picture

co-zy  adjective  ko-ze

small, comfortable and warm

alt:  you sit down to shit and your knees are in the hallway, i.e. cozy

 

Tue, 04/29/2014 - 11:18 | 4707820 TheFreeLance
TheFreeLance's picture

As soon as I have some visibility on where my kid is going to college I start making low-ball all-cash offers for condos. I'll also try to nuke condo fees with a one-time lump sum payment. I always wanted to be a slum lord.

Tue, 04/29/2014 - 11:39 | 4707913 toady
toady's picture

I have a line on a 4 unit complex here in Phoenix. 3 one bedrooms, 1 4 bedroom, 150K. Rents on the low side would be $2500 a month,but, as the article says, rents are going up. Pays for itself in 7-8 years, then it's all gravy.

Slumlord it is !

Tue, 04/29/2014 - 12:31 | 4708217 dontgoforit
dontgoforit's picture

Been there done that.  Be sure to get 3-years of rent as a security deposit.  Those little freaks destroyed the place nearly every time.  Got out.  Saved money doing so.

Tue, 04/29/2014 - 11:23 | 4707742 Mercury
Mercury's picture
The New Normal American Dream: Homeownership Rate Plunges To 19 Year Low

 

Actually, before all this bullshit started, ~65% was pretty much  the old normal.

So, now we've come full circle, factslapped by this one metric and the realization that the whole, homeownership expansion, credit bubble and central planning circus of the last 30 years was a gigantic waste of resources.

Furthermore it has almost certainly resulted in decreased household wealth and financial security for the bottom 50% - exactly the opposite of what it was intended to do.

 

Nice work Uncle Sam. Now, when can I see my doctor?

Tue, 04/29/2014 - 11:31 | 4707874 tarsubil
tarsubil's picture

Barring unscheduled medical personnel shortages, medical checkups are on the third Thursday of every month at the FEMA education and habituation centers. See you in line.

Tue, 04/29/2014 - 12:09 | 4708058 HardAssets
HardAssets's picture

I agree with all your statement except - "exactly the opposite of what it was intended to do"

These programs do Exactly what they are intended to do and usually that's not what the paid-off politicians say is 'the purpose'.

Actual purposes:

- Whatever are the objectives of the insider special interests who finance politicians - the Big Money boys

- Bribing voters in the short term

 

As an example, research LBJ and his actual statements regarding minorities - what he really thought about them. And he was the guy spouting talk about his 'Great Society' and coming up with all sorts of so-called 'social programs'. 

Tue, 04/29/2014 - 13:18 | 4708486 MisterMousePotato
MisterMousePotato's picture

Abraham Lincoln, too. If he was alive today, he'd probably own a basketball franchise.

Tue, 04/29/2014 - 12:20 | 4708135 rlouis
rlouis's picture

Quite true!

We've all been Barney Franked. Now bend over for your free Obama Care prostate exam.  Ladies, if your insurance doesn't provide coverage it must be considered an inadequate policy and subject to future cancellation.

Tue, 04/29/2014 - 12:34 | 4708239 dontgoforit
dontgoforit's picture

Wasn't it Clinton (Bill) and the Bawney Fwank, Dodd, or someother pissatician who set that crap up that we now call the great double-bubble of 2007?  "Everyone deserves to own a home."  - Sure, and we all deserve Corvettes and college for free, too.  What a moronic way to run a railroad.

Tue, 04/29/2014 - 11:02 | 4707746 Der Wille Zur Macht
Der Wille Zur Macht's picture

Remember when a single income could buy a house? Those days are long gone my friends. 

Tue, 04/29/2014 - 11:09 | 4707774 imapopulistnow
imapopulistnow's picture

I also remember the days when two incomes could by a house.....

Tue, 04/29/2014 - 11:13 | 4707787 Der Wille Zur Macht
Der Wille Zur Macht's picture

All in due time good sir. Soon, that will be a distant remnant of the past and we'll be pooling resources in groups of 3-5 for housing. The government will advertise them as "social community hotspotz".

Tue, 04/29/2014 - 11:20 | 4707833 SilverIsKing
SilverIsKing's picture

With free wifi for sure.

Tue, 04/29/2014 - 12:35 | 4708248 dontgoforit
dontgoforit's picture

Caves.

Tue, 04/29/2014 - 11:28 | 4707793 Bunga Bunga
Bunga Bunga's picture

Or a single bread winner could feed a family with 8 or 13 children. I admire how my great grandfathers could do that with very simple jobs like a baker or a carpenter.

Tue, 04/29/2014 - 12:09 | 4708074 Better_late_tha...
Better_late_than_never's picture

No, I wasn't born yet. It's been broken that long.

Tue, 04/29/2014 - 11:03 | 4707750 Smegley Wanxalot
Smegley Wanxalot's picture

Basementsquattership rates are thru the roof ... which is why I am bullish on trekkie memorabilia.

Tue, 04/29/2014 - 11:04 | 4707754 NoDebt
NoDebt's picture

Just an observation, but seems like a lot of what happened since the start of the current Depression involves the number 5%.

5% drop in GDP (at it's "nominal" trough, give or take a few temfs)

5% drop in labor force participation rate

5% drop in home ownership (not quite there yet, but clearly well on it's way)

5% increase in government spending relative to GDP (from ~20% to ~25%)

Don't know what that means exactly, but it sure looks a lot more like a structural problem to me than a cyclical one.

Tue, 04/29/2014 - 11:05 | 4707756 DavidC
DavidC's picture

And still, STILL, this fucking market keeps going up.

DavidC

Tue, 04/29/2014 - 11:11 | 4707780 101 years and c...
101 years and counting's picture

of course. anything that punishes the working class is good as their money goes "pouring" UP THE LADDER due to fed policies.  no one can afford homes now, so they get to becoem forever indebted to the banks/investment firms that have purchased all foreclosed units in the last 5 years.  the fed continues to fuck the middle class and will continue to do so until there is an uprising.....

Tue, 04/29/2014 - 12:13 | 4708092 sleigher
sleigher's picture

Guillotines in Times Square.  Nationally televised.  Think of the ratings.

Tue, 04/29/2014 - 12:22 | 4708148 SheepDog-One
SheepDog-One's picture

But don't worry....the SEC assures us that markets are like totally non-manipulated and are 100% for reelz.

Tue, 04/29/2014 - 11:06 | 4707757 rsnoble
rsnoble's picture

Instead of rents lowering they will change ordinances and allow 10 families in one home.

Tue, 04/29/2014 - 11:11 | 4707781 TheFreeLance
TheFreeLance's picture

Localities will fight that tooth-and-nail cuz they know property values would plummet. So Blackrock will have a handy counter proposal: Why don't knock down all these single fams and replace them with nice tenements, you'll have to finance them via a TIF of course -- and we'll help you take the bonds to market, natch -- but it is wins all around.

Tue, 04/29/2014 - 11:18 | 4707816 Sudden Debt
Sudden Debt's picture

the way to sell it to the people is with a good soundtrack

http://youtu.be/3RGWE6zJKXk

Tue, 04/29/2014 - 11:22 | 4707845 SilverIsKing
SilverIsKing's picture

I'm forming a line outside the Playboy mansion.  If I'm going to have to live with a group of people, I want to enjoy my limited space.

Tue, 04/29/2014 - 11:23 | 4707850 Sudden Debt
Sudden Debt's picture

+1000! HAHAHAHAHAHA! SHOTGUN! :)

Tue, 04/29/2014 - 11:19 | 4707824 robertocarlos
robertocarlos's picture

A way to counter that is to require one registered parking spot per vehicle. Another way is to move.

Tue, 04/29/2014 - 11:07 | 4707758 evernewecon
evernewecon's picture

 

 

 

 

Note it's a pdf:

http://ucop.edu/student-affairs/_files/regents_0607.pdf

 

Page 34:

 

, "debt that requires between 5% and 9% of a student’s postgraduate earnings is 

considered to be manageable..."

 

but where does that leave them when 

the mortgage, monetary and housing

markets are privatized, including 

with housing supply consummately 

manipulated?

 

 

 

Tue, 04/29/2014 - 11:08 | 4707766 Professor Fate
Professor Fate's picture

This is the new normal as the buy-to-rent Wall Street hedgies suck the last drop of disposable income from the vanquished middle class.  The Fed continues to maul the Amercian Dream while the banks enjoy high cotton.  The more the Blackrocks buy, the more rent control they have.  There has to be a very, very special place in hell for Ben Bernanke.

Fate the Magnificent
"Push the Button, Max"

Tue, 04/29/2014 - 11:17 | 4707807 Dr. Engali
Dr. Engali's picture

Fate the Magnificent
"Push the Button, Max"

 

A reference to one of my all time favorite classic movies, The Great Race.  

Tue, 04/29/2014 - 11:27 | 4707865 infinity8
infinity8's picture

+1 for use of "vanquished", "maul", and "high cotton". As well as sentiment for Berfuckface.

Tue, 04/29/2014 - 11:08 | 4707767 starman
starman's picture

USA =  "dreamaholics anonymus"

Tue, 04/29/2014 - 11:08 | 4707768 Obama_4_Dictator
Obama_4_Dictator's picture

I pay 1225 a montyh to rent a 1317 sq ft, 3 bed, 2 bath home.....getting a little crazy

Tue, 04/29/2014 - 11:16 | 4707798 NoDebt
NoDebt's picture

I feel your pain.  Do you happen to know how much of that rent check goes towards taxes?

You see, you really have TWO landlords.  Just mentioning that in case you ever decide to go postal over this situation, I want to make sure you shoot the right one.

 

Tue, 04/29/2014 - 11:31 | 4707875 Obama_4_Dictator
Obama_4_Dictator's picture

Haha, yes, I am well aware.  Money talk and bullshit walks - if an investor has the money to buy a property and I don't, then I have to rent from him.  I like to put my money in other tangible assets.  When this house of cards falls down, these investors are going to be hurting....I'm not worried

Tue, 04/29/2014 - 11:32 | 4707883 JMT
JMT's picture

Where exactly? you can't even find a studio apartment for that in the NYC metro area not even in CT or in Massachusetts. $2,000 a month to rent a small one bedroom apartment is the new normal

Tue, 04/29/2014 - 12:56 | 4708372 Pemaquid
Pemaquid's picture

Sounds like you are bragging.

Tue, 04/29/2014 - 11:09 | 4707771 onewayticket2
onewayticket2's picture

demographic.....GenX and GenY are saddled with debt and increasing taxes and costs.

 

 

Tue, 04/29/2014 - 11:09 | 4707773 i_call_you_my_base
i_call_you_my_base's picture

Home ownership at lows while prices continue upward. Makes a lot of sense.

Tue, 04/29/2014 - 11:15 | 4707795 Peter Pan
Peter Pan's picture

House prices rising faster than wages is the biggest culprit leading to foreclosure, marriage bust up, delays in forming households, delays in having children and the like. Housing needs to be principally about shelter rather than speculation.

Too many western societies have squandered their efforts on becoming home owners when society would have been better off in investing in research and infrastructure.

Tue, 04/29/2014 - 13:22 | 4707932 813kml
813kml's picture

But capitalism demands to book profits today and let the lack of planning for tomorrow shake out in the "markets".

You must be a socialist, a communist, or a realist.

Tue, 04/29/2014 - 11:15 | 4707797 John McCloy
John McCloy's picture

        No idea why anyone would ever consider buying in this nation in the way this nation has progressed over the past few decades. Why not just rent and pay no property tax, no water bills, no homeowners insurance, no condo/co-op feeds, no expenditure on repairs because that all falls upon the landlord and if you take your time you can find something more affordable than the mortgage handsdown and you are mobile and can move into a newly renovated place every 2-3 years.

     If the market collapses you take none of the hit and are now able to seek a cheaper apt/home to lease. Forget home ownership...renting is the true "Living The Dream"..and if you ever wanna move to another city or state no brokers fee on your sale/attorney fees and waiting period aside from expiration of your lease which you can usually work out with the landlord in rural areas with a 1 month buyout to leave early.

       Government is impoverishing everyone in this nation and they have been doing it more and more as year by year goes past. Used to be able to purchase a nice home on one income now you need both parents working just to afford that overpriced mortgage and the kids get thrown in daycare. And this is because of artificial price inflation because of Fed involvement in home ownership...that is why your tv and cellphones are getting more advanced and cheaper and why your education and homeprices go parabolic...Fed involvement..

   And you no longer get 6% at the bank for your savings..a fucking endless hand into your pocket to buy votes and keep the plates spinning.

Tue, 04/29/2014 - 11:17 | 4707805 SMC
SMC's picture

Home ownership is not having a mortgage and keeping a close eye on the computation and assessment of property taxes - either organizing against or leaving fiscally irresponsible jurisdictions.

In addtion, I have no sympathy for the idiots who are crying about their Home Owners Association - they were fools to buy property with yet another layer of control. Although I enjoy reading about how banks holding property in foreclousure limbo are not paying the local HOA thugs! LOL

Tue, 04/29/2014 - 11:57 | 4708011 toady
toady's picture

I had an. HOA in my first place, back when they were new, and I didn't understand what it was before I bought. The monthly fees kept doubling, people kept stealing the money. It was just crazy. We've avoided them ever since.

It wasn't easy when we moved to Phoenix. Nearly every place we liked had a HOA. We ended up in a place we didn't like as much just to avoid an HOA.

Tue, 04/29/2014 - 12:10 | 4708083 greatbeard
greatbeard's picture

>> just to avoid an HOA.

WTF is the problem?  I've got a HOA and love it.  Of course, I'm the only one that lives here and I don't charge any dues.  And I don't have any rules and I don't give a fuck. Seems to work just fine.

Tue, 04/29/2014 - 12:14 | 4708103 toady
toady's picture

And, BONUS! , You don't have anyone stealing the HOA money!

Tue, 04/29/2014 - 11:17 | 4707814 NoDebt
NoDebt's picture

"Why not just rent and pay no property tax, no water bills, no homeowners insurance, no condo/co-op feeds, no expenditure on repairs because that all falls upon the landlord"

You are already paying for it.

Tue, 04/29/2014 - 11:18 | 4707817 JMT
JMT's picture

someone complaining about paying $1200 to rent anything bigger than a doghouse?? get real, in both the NYC metro area and most of Eastern Mass (East of I 495) its hard to find anything for less than $2,000 a month. Utilities, parking, "amenity fees" are extra.  Even water is another $75 a month now. 

Tue, 04/29/2014 - 11:20 | 4707826 Bushogboner
Bushogboner's picture

Know your Rights!

You have the right not to be killed, unless it was done by a policeman or aristocrat
You have the right to food money, providing of course you don't mind a little investigation, humiliation, and if you cross your fingers, rehabilitation
You have the right to free speech as long as you're not dumb enough to actually try it.

Tue, 04/29/2014 - 11:20 | 4707829 tarsubil
tarsubil's picture

In many ways, I'm the typical American. Wife forced a divorce that I wasn't ready for. I rent, I get raped by taxes and I am cash poor. Essentially, money mismanagement and poor choices like marrying my ex-wife got me to where I am. Still, the system is designed to punish the poor and reward the rich. Makes sense since the rich run everything. Living below your means is a tough pill to swallow for most middle class but it is the only way to get out of under the boot of the financial class. While CC debt is decreasing signifying some semblance of lesson from the middle class GenX'ers, student loans and mortgage debt is still increasing signifying something bad.

Tue, 04/29/2014 - 11:26 | 4707858 JMT
JMT's picture

While CC debt is decreasing signifying some semblance of lesson from the middle class GenX'ers, student loans and mortgage debt is still increasing signifying something bad.

at least credit card debt can be discharged in bankruptcy or you can just not pay and wait out the statue of limitations that you can be sued on it. Student loan debt or anything you owe to the govt as well as state & local taxes you don't want to play around with... 

Tue, 04/29/2014 - 12:19 | 4708128 sleigher
sleigher's picture

I am in the same boat as you.  The only difference being taxes.   F'in bitch...   Maybe Handle is right.  Probably better to just kill your spouse than to go through the divorce.

Tue, 04/29/2014 - 14:16 | 4708789 stopthejunk1
stopthejunk1's picture

Living beneath your means will get you solvent, but will not solve the inequality problem.

 

The rich would love for us all to just be content with less, and never question why their "means" far outstrip their social utility.

 

Yes, we should live within our means.  We should also demand an economic system that limits the distance between one's wealth/income and one's social worth.  The market cannot do this: the market only understands economic worth.  The old saw that entrepreneurs would not create the fancy toys that we have without the promise of becoming a billionaire is simply hogwash.  Ask Elon Musk whether he dreams about electric cars and rocket ships because of money?  Of course he doens't.  And if we could have asked Hank Rearden, even he would have told us that Ayn Rand was full of shit.  Tesla and Franklin and Edison and Newton and Einstein didn't do it for money, either.  Frankly, we don't need the ones that are motivated by profit: we don't need the Carnegies and the Rockefellers.  We do need the Fords and the Hersheys, and it is clear that they were motivated by their love for what they did, not by the attendant wealth.

 

It's possible to fix this inequality problem; other countries have begun to do so.  The "socialist" northern European countries (where people live much better lives than in America) have similar pre-tax inequalities to the U.S.; but their after-tax incomes are far more equitable.  Of course, they still have not addressed their wealth distribution problems.

Tue, 04/29/2014 - 14:26 | 4708828 tarsubil
tarsubil's picture

Living beneath your means will eliminate debt (a non-productive tool that rewards the rich and punishes the poor). If this was done on a national scale, it would destroy the finance industry, which is the primary reason for economic disparity.

Tue, 04/29/2014 - 11:20 | 4707831 Schmuck Raker
Schmuck Raker's picture

I don't understand the third graph; why would anyone want to rent a vacant "lot"?

Tue, 04/29/2014 - 12:03 | 4708041 toady
toady's picture

Grazing fees?

Parking lots?

Tue, 04/29/2014 - 11:23 | 4707847 JMT
JMT's picture

I don't know why people pay upwards of $500,000 to buy a "Co - Op" apartment (where you only own "shares" in a corporation) outside of Manhattan (and not in the chi chi parts of northwestern brooklyn where nannys push the children of the top 1% in $5,000 strollers)....  I looked at a few of these 'co op' apartments in Queens where a 'large by NYC standards' 900 square foot apartment in a very average neighborhood of Queens start at over $300,000 PLUS another $600 - $800 a month (every month as long as you live there) for maintenance which does not include utilties plus a co-op board must approve you and won't even accept your application if you are putting anything less than 20% down. 

Tue, 04/29/2014 - 14:07 | 4708754 stopthejunk1
stopthejunk1's picture

It sounds like you're saying, "I don't understand why anyone would want to live in New York.  It's so expensive."

 

Well, there are 9 million people living there.  Why dont' you ask some of them?  They will tell you pretty quickly.  

Tue, 04/29/2014 - 14:28 | 4708842 tarsubil
tarsubil's picture

They want to feel rich.

Tue, 04/29/2014 - 11:24 | 4707851 Bastiat
Bastiat's picture

Remember the "ownership society?".   Owned.

Tue, 04/29/2014 - 11:30 | 4707873 orangedrinkandchips
orangedrinkandchips's picture

It capitulated in '85.....when rates were in the TEENS.....now.....bizzaro '85 we have negative rates w/o adjusting for inflation!

 

Before, why people said "fuck it" were high rates....paying more interest than princ. per month....

Now, rates are great but who IN THEIR RIGHT MIND WANTS TO PAY TOP PRICE FOR A DEPRECIATING(ED) HOUSE?

 

Rent is like SELLING A NAKED CALL.....there is no limit to what these fuckers can/will charge for rent....until we all become squatters....or trash the place.....

 

fucked if you do, fucked if you dont........so dont take it personally folks....everyone gets fucked.

Tue, 04/29/2014 - 11:49 | 4707966 The_Ungrateful_Yid
The_Ungrateful_Yid's picture

Fuckin A!

Tue, 04/29/2014 - 11:35 | 4707893 SMC
SMC's picture

A few thoughts from rural living:

1. Always live below your means.
2. Repair before buying new.
3. Listen before speaking.
4. Help others and they will help you.
5. "Real" is in front of you - not on TV.

Tue, 04/29/2014 - 11:41 | 4707931 The_Ungrateful_Yid
The_Ungrateful_Yid's picture

6. Have Ammo, tactical weps, beans, toilet paper

Tue, 04/29/2014 - 12:16 | 4708115 therearetoomany...
therearetoomanyidiots's picture

...fuel and the bible by your side.

Tue, 04/29/2014 - 14:04 | 4708741 stopthejunk1
stopthejunk1's picture

7. The more wives, the merrier.  

8. If she pretty, she ain't too young.

9. The animals do it so why can't we?

10. Please pass the teeth.

Tue, 04/29/2014 - 11:36 | 4707899 Baby Eating Dingo22
Baby Eating Dingo22's picture

But rising home prices are good for America.

No Inkjet Left Behind

Tue, 04/29/2014 - 11:52 | 4707984 GrinandBearit
GrinandBearit's picture

TPTB planned it this way.

Tue, 04/29/2014 - 11:54 | 4707991 Agent P
Agent P's picture

"The rent is too damn high!"

Tue, 04/29/2014 - 11:54 | 4707993 khakuda
khakuda's picture

Exactly why the Fed changed to the PCE from the CPI which has a larger weighting in rents.  So now, food, energy and housing are not core consumption.

Tue, 04/29/2014 - 11:54 | 4707996 Van Halen
Van Halen's picture

A question for the board: Could the low onwership/high rental numbers be in part due to the outrageous spending habits of Americans? Every one of my friends spend money like damned fools. I know for a fact that more than one have credit cards maxed out and second mortgages to keep the vacations, new cars, pools, and new furniture coming.

My point being that I don't believe that these people can't afford a house as much as they can't budget to pay for the house they get.

Tue, 04/29/2014 - 13:14 | 4708458 Pemaquid
Pemaquid's picture

Living beyond ones means is nothing new. The opposite is where one finds true contentment.

Tue, 04/29/2014 - 12:02 | 4708030 juggalo1
juggalo1's picture

I don't see this as a disturbing trend.  Ownership rates are still dropping, which is a good thing.  They were manipulated higher by lax lending standards and low real rates.  The increased rents will help support the higher home prices which ZH also claims are a bubble.  Meanwhile most people should be renters.  It allows them to move to pursue job opportunities.  As for missing out on equity appreciation, we've all seen how that worked out.  Equity appreciation is a lousy reason to buy a house.

Tue, 04/29/2014 - 12:14 | 4708099 therearetoomany...
therearetoomanyidiots's picture

Meh.   There still are lax lending standards.   You just need more money available on a monthly basis which people just do not have.  

Being in and around the mortgage industry, I can see FHAs still happening at quite a rate with 3% down loans.  

FHA is probably the most common loan right now because so many have defaulted or have terrible credit scores.   The number of people that are below 620 is confounding.   More and more we get loan requests from people that have atrocious scores, in the 4s and 5s.   THey've all had defaults or short sales or foreclosures in the past 3 years.  

You are fucked if you believe this is a good thing.    The point, I believe, is that prior to the push by Clinton and the progressive republicans to 'increase' ownership amongst those least able to afford it, a regular guy working a regular job IN THIS COUNTRY could afford a small house mortgage.    He made about 40-50k a year.   Saved some money on which he earned some decent interest.   All that made home ownership more attainable...our economic model did work until the northeastern educational elite took over...starting with Papa Bush.   It's been all NE ivy leaguers since.   

 

Tue, 04/29/2014 - 14:02 | 4708730 stopthejunk1
stopthejunk1's picture

I mostly agree, except for the idea that "our econmic model did work until..."  That's hogwash, our economic model has been failing for decades.  Inequality has been increasing since 1970; real wages have stagnated, and worker protections were gutted under Reagan.  Then Clinton signed NAFTA (which had been lurking unsigned for 40 years) and everybody since Reagan has refused to enforce the Sherman antitrust act in any meaningful way.  It has been bad for the little man for some time, and it keeps getting worse.  

Tue, 04/29/2014 - 12:04 | 4708040 Fiat Burner
Fiat Burner's picture

Once landlords put Chart #2 beside Chart #3 and realize their rent ask won't be getting a rent bid for much longer, the housing market will take a massive dump as these landloards unload their rental property.

Tue, 04/29/2014 - 12:08 | 4708068 ChargingHandle
ChargingHandle's picture

The Bureau of Labor Statistics reported yesterday that in 20% of American families in 2013, not one member of the family worked. 

Tue, 04/29/2014 - 12:10 | 4708081 Spungo
Spungo's picture

What was going on between 1985 and 1994? That seems like a deeper recession than the current one.

Tue, 04/29/2014 - 12:21 | 4708143 toady
toady's picture

Reagan.

Tue, 04/29/2014 - 14:23 | 4708816 Cthonic
Cthonic's picture

S&L crisis

Tue, 04/29/2014 - 12:20 | 4708134 Spungo
Spungo's picture

Also, why all the hate for investors owning real estate? REITS are not a new thing. They're at lesat 50 years old, and every country has them. They're nice because they give the common man a way of being a landlord without needing to deal with drug addict tenants.

Tue, 04/29/2014 - 12:25 | 4708174 Spungo
Spungo's picture

"WTF is the problem?  I've got a HOA and love it."

Most of them are run by nazi/communist fuckheads who have nothing better to do than hassle people. You can't put a flag on your house, you can't paint the fence any way you want, you can't use the kind of grass you want, you can't use certain halloween or christmas decorations, you can't leave your car parked outside of the garage. 

Tue, 04/29/2014 - 12:53 | 4708353 QE Abyss
QE Abyss's picture

I am a home owner in an HOA.  It is made up of 450 homes (not condos).  Most homes are 3 or 4 bedroom with 1 or 2 bathrooms on 6K sqft or 7k sqft. The homes were not a tract development, most built in 1945-1955, many custom and the HOA has been in existence since 1946.

My HOA are $15 per month, yes under $200 per year.  WHile I agree of the nazi type mentality and control of homes within the HOA, I must admit through my own research that crime is extremely low within the HOA and there are no bootleg remodels, or broken down cars in the driveway.   [Last I checked with LAPD, they could not find any crimes on the street I live in for the past 5 years except domestic violence]. As an LA native who wanted to be near the beach, but could not afford to be near the beach, I settled for Baldwin Hills 2 years ago before house prices went crazy.

When I was looking to purchase a condo in West LA, I was shocked to see the HOA fees were typically $300 to $500 per month for a 2bedroom crapshack built in the 80's - a time when US developers were using cheap Chinese plasterboard which is slowly rotting out of homes all over the US. 

 

 

Tue, 04/29/2014 - 12:33 | 4708235 mrdenis
mrdenis's picture

Best of all , thoes that think they own can be taxed out as well .......Oh wait that's what reverse mortgages are for ......

Tue, 04/29/2014 - 12:37 | 4708255 the grateful un...
the grateful unemployed's picture

the hedoic adjustment works against the Feds manipulated CPI, rents are high ( in part because hedge funds now own the property, and they won't lose money)  and asset prices are falling, and one problem feeds the other. if an investor is losing value on a rental property with a loan outstanding, their primary recourse is to raise the rent in order to square the balance sheet. (or we could be heading back to 2008)

the FED doesn't want that, and the government doesn't want that, so rent subsidies are put in place(HUD and Sec 8 to put a bid under the rental market - any commodity which is subsidized will cost more for those who don't receive the subsidy - you can subsidize a minority of consumers and influence the price for the majority - they do this with food as well - we are on a deflationay glide path - its a soft landing ahead, real real soft)

asset deflation with CPI (bad moon a) rising is the new normal. would you buy into RE rental units if you understood this? now that you're in how do you get out? there are cash buyers (notice most of the RE sales done now are cash) but you still have this problem, your assets are losing value, but its possible for you to accept that loss, because you have no paper at the bank. will the rent you derive offset the loss of asset value (minus taxes taxes taxes) so you are losing money more slowly this way, but it might be more prudent to move into something that doesn't lose investment value, like paper money. enter the fed...

just wait until money velocity goes negative

Tue, 04/29/2014 - 12:41 | 4708278 syntaxterror
syntaxterror's picture

As the dollar goes to ZERO, rent goes to infinity. Pretty simple.

Tue, 04/29/2014 - 13:01 | 4708389 message2gowri
message2gowri's picture

I like to Propose Congress New Legislation to support 3 Income Family(Man+Women1+Women2) if All three can find a Work we can save the Housing Market!! It is better than what FED doing with QE & Fanne and Frede!! 

Tue, 04/29/2014 - 13:08 | 4708434 the grateful un...
the grateful unemployed's picture

everyone should own as many robots as they please, and they can send these robots off to work everyday and keep the money they earn. right now the corporations are the only ones allowed to own robots. we need workers rights for private robot workers, to give them the same rights as corporate or government robots to compete for the job. you cant discriminate against robots either. robots can fight the wars against other robots as well. just buy a carpenter robot and it will build your house for you. do you need a housing market? save the robot market.

Tue, 04/29/2014 - 13:59 | 4708677 stopthejunk1
stopthejunk1's picture

There's nothing inherently wrong with renting.  Germans rent in droves, and they're one of the most financially healthy states in Europe.

 

In America, perhaps it is a good time to become a landlord.  It's a buyers market in real estate (outside of select "permanent bubble" areas like NYC or LA) and rents will indeed go up.  Rents will also rise when interest rates rise.  There are also a shit ton of tax deductions that landlords can take.  

 

By the way, the home mortgate interest deduction does not affect the home ownership rate.  Rates in countries with no such deduction, controlled for other factors, are exactly the same.  All it does is encourage people to borrow more than they should, to live in bigger houses than they need.  And it's a billion-dollar boon to the real estate agent cartel (which frankly should be investigated under RICO.)  It is past time to do away with the real estate mortgage interest deduction.

 

Anyway, 64% is PLENTY of people owning houses.  What do we want, 99%?  This is like the argument that "everybody should go to college."  Uh, no they shouldn't.  If you think they should, you ought to tour a state university once in a while.

Tue, 04/29/2014 - 14:50 | 4708911 conspicio
conspicio's picture

Also lost in the article is the underlying reason for ownership that spiked the table in the first place. Subprimes drove the number way up and as a number, the "owner" in all cases was not the human, but as we all know was THE BANK. So it would be great if the article, the government, the banks, et al...could be clear about the "owner" versus ownership in the article. A fee simple title holder is an owner. Someone living in a residence with a 5/1 ARM and 5% skin in the game? Census counts them as an owner. Dubious, but technically correct. On the flip side, the title holder who has no mortgagee (Like BlackRock, for instance) is also an owner even if the home it holds title to is vacant. And when they are not the title holder, they securitize that mortgage ad infinitum, which does nothing to affect their "owner" status. So I would have to guess that these numbers are even worse than the data portends and like most things run by the bureaucracy these days, a little lie here, a definition adjustment there, and pretty soon it all is meaningless but we base our opinions, shift our values, and revisit our baseline beliefs over fuzzy semantics, bastardized definitions, and the continued lack of a lingua franca between reality, lies, and clever bureaucratic marketing.

 

Tue, 04/29/2014 - 14:51 | 4708917 Aussiekiwi
Aussiekiwi's picture

I think the point being made is that home ownership rates are dropping at a time when the MSM is loudly proclaiming how much better every thing is, the question as to whether renting is better than buying is a completely different question.

 

Tue, 04/29/2014 - 14:22 | 4708812 besnook
besnook's picture

this is bullshit! the cpi says inflation is practically nonexistent. if you can't believe .gov who can you believe? your lying eyes?

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