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This Housing Chart Destroys The Arguments Of The Economic Optimists
Submitted by Michael Snyder via The Economic Collapse blog,
Did you know that the rate of homeownership in the United States has fallen to a 20 year low? Did you know that it has been falling consistently for an entire decade? For the past couple of years, the economic optimists have been telling us that the economy has been getting better. Well, if the economy really has been getting better, why does the homeownership rate keep going down?
Yes, the ultra-wealthy have received a temporary financial windfall thanks to the reckless money printing the Federal Reserve has been doing, but for most Americans economic conditions have not been improving. This is clearly demonstrated by the housing chart that I am about to share with you.
If the economy really was healthy, more people would be getting good jobs and thus would be able to buy homes. But instead, the homeownership rate has continued to plummet throughout the entire “Obama recovery”. I think that this chart speaks for itself…
Of course this homeownership collapse began well before Barack Obama entered the White House. Our economic problems are the result of decades of incredibly bad decisions. But anyone that believes that things have “turned around” for the middle class under Barack Obama is just being delusional.
If the U.S. economy truly was in “good shape”, the percentage of Americans that own homes would not be at a 20 year low…
The U.S. homeownership rate fell to the lowest in more than two decades in the fourth quarter as many would-be buyers stayed on the sidelines, giving the rental market a boost.
The share of Americans who own their homes was 64 percent in the fourth quarter, down from 64.4 percent in the previous three months, the Census Bureau said in a report. The rate was at the lowest since the second quarter of 1994, data compiled by Bloomberg show.
Rising prices and a tight supply of lower-end listings have put homes out of reach for some entry-level buyers, who also face strict mortgage standards. The share of U.S. homebuyers making their first purchase dropped in 2014 to the lowest level in almost three decades, the National Association of Realtors reported last week.
And it appears that this trend is actually accelerating. During 2014, the rate of homeownership plummeted by a total of 1.2 percentage points for the year. That was the largest one year decline that has ever been measured.
So why is this happening?
Well, in order to buy a home you have got to have a good job, and good jobs are in very short supply these days.
Over the past decade, the quality of the jobs in our economy has steadily declined as good jobs have been replaced by low paying jobs. In addition, government policies are absolutely murdering small business. At this point, small business ownership in the U.S. is hovering near record lows.
This has resulted in millions of people falling out of the middle class, and it has contributed to the growing divide between the wealthy and the rest of the country.
If our economy was working the way that it should, the middle class would be thriving.
But instead, it is being systematically destroyed. If you doubt this, I have some statistics that I would like to share with you. The following facts come from my previous article entitled “The Death Of The American Dream In 22 Numbers“…
#1 The Obama administration tells us that 8.69 million Americans are “officially unemployed” and that 92.90 million Americans are considered to be “not in the labor force”. That means that more than 101 million U.S. adults do not have a job right now.
#2 One recent survey discovered that 55 percent of Americans believe that the American Dream either never existed or that it no longer exists.
#3 Considering the fact that Obama is in the White House, it is somewhat surprising that 55 percent of all Republicans still believe in the American Dream, but only 33 percent of all Democrats do.
#4 After adjusting for inflation, median household income has fallen by nearly $5,000 since 2007.
#5 After adjusting for inflation, “the median wealth figure for middle-income families” fell from $78,000 in 1983 to $63,800 in 2013.
#6 At this point, 59 percent of Americans believe that “the American dream has become impossible for most people to achieve”.
You can read the rest of that article right here.
The group that has been hit the hardest by all of this has been young adults.
Back in 2005, the homeownership rate for households headed up by someone under the age of 35 was approximately 43 percent.
Today, it has declined to about 35 percent.
From a very early age, we push our young people to go to college, and today more of them are getting secondary education than ever before.
But when they leave school, the “good jobs” that we promised them are often not there, and most of them end up entering the “real world” already loaded down with massive amounts of debt.
According to the Pew Research Center, close to four out of every ten households that are led by someone under the age of 40 are currently paying off student loan debt.
It is hard to believe, but total student loan debt in this country is now actually higher than total credit card debt. At this point, student loan debt has reached a grand total of 1.2 trillion dollars, and that number has grown by an astounding 84 percent just since 2008.
If you are already burdened with tens of thousands (or in some cases hundreds of thousands) of dollars of debt when you get out of school and you can’t find a decent job, there is no way that you are going to be able to afford to buy a house.
So we have millions upon millions of young people that should be buying homes and starting families that are living with their parents instead.
Back in 1968, well over 50 percent of all Americans in the 18 to 31-year-old age bracket were already married and living on their own.
But today, that number is actually below 25 percent. Instead, approximately 31 percent of all U.S. adults in the 18 to 34-year-old age bracket are currently living with their parents.
Something has fundamentally gone wrong.
Our economy is broken, and anyone that cannot see this is just being foolish.
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Until prices go back to pre 1997. Nothing can improve in the economy.
Holding rates down just prolongs the agony.
real mortgage interest rates in USA are already deep into NIRP territory considering real inflation is at 8%. They will just keep getting nirper until we have nominal nirp mortgage rates. And they will just keep going because they HAVE to be able to unload the foreclosures that they have been holding back from the market.
This assumes that buying a home is even a priority anymore. The reality on the ground is that if you want to work, you go where the work is. Having a home is a serious impedement to mobility and a 30+ year yolk of debt and taxes.
I used to think that RE prices dropping back to 1997 levels would do it, but with all the shyte jobs out there, now Im thinking that prices should fall back closer to the prices of 1977 instead. Part time burger flipper and life insurance jobs simply arent enough to pay a mortgage and upkeep of a home and drive a decent car.
Not just prices, but consumer debt as a percentage of income as well. And real income will have to rise to at least match what it was then.
In other words, it won't happen, therefore nothing can improve in the economy.
i disagree. until the major wall street banks all ( except the last survior) go out of business, nothing can improve . history moves forward by creative destruction.
the last remaining bank will probably try and pull the same tricks as the banks we have now, but the kind of lehmanesque event that could result in one bank buying the entrails of the other banks means that there would be a political reckoning.
everything in the end of the day is about power and control . the anarchist narrative is a nice one. but when a bunch of big pigs have been terroizing the entire system for years, the only idea of a 'reset' requires that many of the pigs get slaughtered. the only way that happens is when the pigs acknowledge the time for cooperation is over and begin attempting to cannibalize one another.
that's an unlikely scneario, but it's the only scenario. otherwise, instead of the banking collapse, or rather , in addition to it, you will get state sponsored central banks. where the very politicians who are guaranteed to usually be incompetent proclaim they can solve your problems with their hand on the printing press button.
it's a tricky thing printing money. but it's far trickier to get the power to print money, and far simpler to lose that power!.
I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.globe-report.com
The underlying process is called "asset-stripping"; the foundations of this process, of asset-stripping the public, are the IRS reportin requirements.
In fact, its the ONLY reason for them
But O'bummafuckyourcare said we are in a recovery?! WTF
Joe Biden's Recovery Summer #6 baby!
Well maybe if you're son Hunter and on the board of directors of Ukraine's largest gas conglomerate.
@Snyder... Dude, are you' like a 'wannabe' Hilly Kristal or somethin'?
Just sayin'
Why would I want my slaves owning homes? That would just be silly.
The whole reason for slaves "owning" shelter is that you don't have to provide it. Sick, old, hungry or homeless slave - not your problem! Get a fresh supply of pre-processed, healthy, disposable humans. Whisper in their ears that the freedom is just another trinket away and they'll be doing backflips for you for the rest of their days.
Y'all need to get with the program.
Slavery 1.0: master has to provide housing and food to his slaves because he OWNS them and is responsible if they die -- ie he loses his investment.
Slavery 2.0: master only demands payment with gun to head but has no responsibiltity for keeping slaves alive because he can replace them for free. No purchase required, just offer him a big screen and iPhone, and maybe a new stickbuilt chinese drywall house with granite countertops. Of course it helps that the masters control the money printing machines.
Unrelated but give the Refuse-Resist family the right to print money and within 3 generations, little Refuse-Resists will own everything within 4 counties.
Home ownership percentage is not necessarily at a "20 year low". It's just now getting back to where it should be following the inflating of the housing balloon from 1990s through 2007. Let's face it, the Fed (along with Fannie and Freddie) have completely fucked up the housing market for a long time to come. It will deflate further.
Yeah, I agree. That line doesn't look like it's going to stop going down any time soon.
interest rates need to be at 3 to get the decline to turn around. i supose i could put together a formula that takes into account interest rate and income. at 2 - 2.5 percent the bubble reflates. maybe that is where this goes. look at german ten year...
Are you speaking mortgage rates? They are already at and below 3, don't see the reflation.
Or Fed Reserve rates? Cause that is just funny.
When millions/billions of debt reprices, the result won't be more home buying, just like what happened in '07. Bear Stearns didn't "take down" the system, they were taken down because Americans were ass-raped by the '05 financial regulations AND the Bernake decided to raise rates right as we were suffocating.
As I see it there is no fixing this mess. The only fix is for the system to explode, the politicians, CEOs of Fortune 500 and banksters to go short ropes.
Until that day we will have lies and statistics to dream about. The rest of our future was already sold.
Recovery, what a freaking illusion that remains.
what would the chart look like if mortgage rates went to 5% on the 30 yr...which is still a historically low number..forget 7-8%
well... On a day like TODAY... I'm guessing it would look like TODAY AGAIN
Excellent chart -- no "snapshot" that one.
This secular trend has to continue until some reasonable ratio of median existing house price to median household income is restored. The current ratio is 4, which is historically very high for the US. During the happy days the ratio was 2.5 - 3 and that was for one breadwinner per household and better job security. At the end of the 1930s depression (soon to be known as the lesser depression) the ratio was 2.
At some point, the Kondratieff Winter will assert itself. House prices will fall by 50% or wages will double or some combination of both yielding the same result. In the meantime, it is better to rent.
What I really would like to see is a chart of what % of population OWNS their home without a mortage! Unfortunately, I have never seen that data presented. I suspect the graph would look even worse than the one above.
around a third of homeowners don't have a mortgage.
there is more room for adjustment here in the usa before disaster occurs. i anticipate an accelerated move into alternative living means from small houses(3 br under 1000sqft. to mobile homes or,er, uh, manufactured homes. there is still a lot of cheap land in rural areas not far from urban areas. industry and other jobs are scattered across the urban/suburban landscape. looking at the developement of the average usa city from post ww2 and there has been a widening quest for cheaper land from around the urban core. the suburbs became little cities in their own right and drew people from across the urban and suburban area so they grew. in nyc, for instance, or boston, for that matter the urban/suburban realm extends for almost 100 miles in all directions. between that and the weather multitudes of new englanders have moved south for jobs and cheap housing.
the problem now is low income. so either, as you said, the income has to come up or the house has to get smaller/cheaper. income won't come up until labor organizes. no one is just going to give anyone money if they don't have to. there are stories about container homes and mini homes but the venerable trailer has always been around to save poor people and drunk guys. you can still buy a plot of land for ten grand, a used trailer for less and septic tank, water and electricity hookup for a coupla grand and you have home sweet home with a 9-12 dollar an hour job within an hour of your american dream. even a trailer park is cheap rent.
that is the future of america in one way or another.
A little realty, from a builder. Forget the lot size. Basically, forget the house size. Dateline, Maryland's Eastern Shore..... Not exactly Long Island.
Drum Roll.......
Impact fee ( schools, roads, fire dept. Etc). About .... $12,000
Septic ( new mandate, must have de- nitrification) ....... $ 22,000
Well...... well, it's about. $8,000
Sprinkler system. ( oh they're fun on a well and septic,
And mandatory). varies,about. $7,500
Permits and inspection fees ( varies, but for a house. $4000
Soo,.... That's only a couple thousand....er $54,000 and no shack yet.
And y'all wonder why builders and developers don't build something that sells for less than $400,000. They CANT! It's fucking government , making the cost prohibitve,
Home sweet home on $9-12.00 and hour. You're .....less than informed.
Now your not.
"until labor organizes..."
Oh my gawd, I'm laughing my ass off right now.
Guess you didn't get the unionized memo, they will run every last job out of this country to save the VERY last union gig.
The freaking unions sold out the American components manufacturing to reap their own inflated rewards. The every last job thing was the quote from the lead negotiater for the UAW.
Flash forward less than ten years and the unions were in Washington crying because after firing their best customers (American, non-union, suppliers) they realized that people making $1.50 an hour in China can't afford to pay for over-union-inflated cars.
Unions equate to fewer jobs and more corruption. I'll hold my breath waiting for that to "work."
Some may not be mortgaged, but what you're not getting is that 0%, that's right I said ZERO percent own their homes.
The county (your county) owns the home where you reside, whether you owe money and interest (on money created from thin air of course) is immaterial.
They can and will raise property taxes (should be referred to as rent) with impunity and men with guns will make goddamn sure you pay.
Don't believe me? Just don't pay your rent this year and see how long it takes for armed men to show up demanding payment or else.
Home Ownership, as it is commonly understood here in Scamerica, is nothing but a comfortable lie to assuage the sheople.
We don't own shit that we can't carry or that isn't in a nearby lake or river bottom.
So articles like this are meaningless. There are many elephants in the room that will never get mentioned in media because, well no one likes noticing huge piles of elephant shit everywhere. It stinks. And that goddamn elephant had been shtting everywhere.
Looks like home ownership simply reverted to the mean.
Another rigged market.
One reason why homeownership is at a 20 year low is student loan debt. The government git involved with financing student loans so that everyone can 'afford' college. Everyone from the age of 4 has heard that they need to go to college and get a degree. Well, since everyone could 'afford' to go and everyone 'needed' to go, Universities raised their rates year over year. Now an entire generation is in massive debt with nothing to show for it. The bright side of this, I hope, is that my generation has learned at a young age that debt=slavery. I will not be taking out any loans from a bank the rest of my life!
We need to go back to saving up for purchases. If you are saving long term (more than a year or two) for a big purchase like a house or a wedding (crazy how much people spend on those), it would be wise to keep those savings out of the dollar. It loses it's value every single year! It will only get worse the closer we get to the cliff.
Even if you aren't saving for a big purchase, I still believe it's a good idea to buy silver and gold! You can help spread ideas of real money and actual silver by giving one of these candles with a silver coin to a friend: www.etsy.com/shop/ScentSavers
Mansfield Ohio! Nice, I've driven through it (have folks in the region).
I'm glad you've taken the initiative to start your own business, even if it's just an esty shop. Hope you grow and make some sales, but please do not spam the zerohedge.
Not to worry. Looks like we will have a bunch of Arabs flush with cash to buy houses in the US.
They love us for our freedom.
LOL!
What about the seasonality adjustment?
Come off it. Making housing affordable on one lower-middle-class income allows the proles to get married and for the women to stay home with the children instead of both man and wife spending every waking moment at work for fear they'll be outsourced.
Then they start voting Republican.
... it's not a question of how many people own home, but how many homes are owned ...
In 1948-51, a few years before selling his company and retiring, my grandfather bought a nice big piece of land on the outskirts of town and built his dream house on it.
It was the first and last home he ever owned. My dad never lived there; he grew up in rental housing because his dad saw no need to own a house that's not good enough to die in.
duh you can't write off the cost of home repairs, insurance and depreciation if you are the owner. Why would you want to be a homeowner and get stuck paying all those expenses without being able to write off anything?
Here's how you do it: buy a house and rent it to a family member, and they buy a house and rent it to you. wallah!
can i start a corporation.let it buy ahouse and rent it to me? is that done?
Houses are still double or triple their real value depending on your local area (unless that area is rust belt Ohio, then you're about on the money)
Prices in most areas are simply too high, especially so in a few bubble metro areas like NYC and SF. In the real world land would maintain value and slightly appreciate with population growth while the structure on top would depreciate as it ages/decays.
It looks like a giant mountain of flames.
"Fire on the mountain, run boys, run."
Don't forget that we have had the doors off for decades attracting the dregs of the world.
All those illegals and unreasonables (muslim trash) are not apt to be buying any homes, they simply rent and pack them to the gills with other illegals, unreasonables and his four concubines..
If you don't take the undocumented out how can we find the base line to compare them?
They have diluted the samples.
My brother owned a small place, in Baltimore. He passed away( way before his time). Next door is a nice brick house. The owner died,and left it to his daughter. She shacked up with a beaner.
Today, the house is trashed, there is a 40' container in the driveway, with a tarp porch between it and the house. About 10-12 live, that's right, fucking live,in the container. Run to the house to use the bathroom.
About 10-15 in the house. It varies.
A sheet of paper is taped to the mailbox with about 30 Hispanic names on it. You can't make this shit up.
The rich part... The county is making Mom do paper work and get lead inspections, etc....to rent my brothers house....to a single tenant.
But the county stays away from little Mexico like it is Kryptonite or the plague.
There's no money in preying on illegals. That's why here in NC, when they're caught for 'crimes' that would land a citizen in serious hot water, they're mostly just released. And they simply get a new ID with a new name and voila! No consequences for Jose and Juan.
That's it. They go where the money is from the people who cannot refuse.
Lot of thievery that never got investigated inside that chart mountain.
watch them unleash a real estate bubble like we have never seen....it is going to make Gold look like a bad investment!
It's a bullish flag, it's a bullish flag formation. Recovery is here, time's never better to buy, prices will only go up from here. Quickly now, go buy a home, ASAP, while the rates are down. No down payments, no credit check. Hurry.
We are right where we should be.