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US Middle Class Stays Dead: Homeownership Drops To 48 Year Low; Median Asking Rent Soars To All Time High
Three months ago, just as the last Census Homeownership and residential vacancy report hit, Gallup released its latest survey which confirmed just how dead the American Dream has become for tens if not hundreds of millions of Americans.
According to the poll, the number of Americans who did not currently own a home and say they do not think they will buy a home in "the foreseeable future," had risen by one third to 41%, vs. "only" 31% two years ago. Non-homeowners' expectations of buying a house in the next year or five years were unchanged, suggesting little change in the short-term housing market.
As Gallup wryly puts it, "what may have been a longer-term goal for many may now not be a goal at all, and this could have an effect on the longer-term housing market."
Earlier today, the US Census released its latest homeownership data, which confirmed that for what is left of America's middle class, owning a home has become virtually impossible, with the homeownership rate plunging from the lowest level since 1986, or 63.7%, to just 63.4% the lowest reading since the first quarter of 1967.
Three months ago, when compiling this data we said that "at this rate, by the end of the 2015 and certainly by the end of Obama's second term, the US homeownership rate will drop to the lowest in modern US history." That moment, as shown on the chart below, came far sooner than ever we had expected. The only question is whether the lowest homeownership print on record reported in 1965 and standing at 62.9% will be taken out in the next 2 quarters or in early 2016.
There is no surprise why this is happening. As Bloomberg notes, the biggest culprit is wage growth which "hasn’t kept up with surging home prices. The average household income in June was 4 percent below a record high set in early 2008, even as unemployment dropped to its pre-recession rate, according to Sentier Research LLC."
“We’re still suffering the effects of the housing collapse and the financial crisis,” said Mark Vitner, senior economist with Wells Fargo Securities in Charlotte, North Carolina. “We may have another percentage point to go before we see a bottom” in the homeownership rate, he said.
Yes, it is safe assume that the imminent lowest homeownership print in US history may be the "bottom."
Still, the ongoing death of the middle class is not bad news to everyone: landlords, of which private equity firm Blackstone recently became the biggest in the US, are reaping unseen profits courtesy of runaway inflation in at least one item: rent.
Because as homeownership falls, demand for rental housing is booming. The vacancy rate for rented homes in the U.S. fell to 6.8% in the first quarter from 7.5% a year earlier. It was the lowest first-quarter rate since 1986.
And the punchline, which should come as no surprise to anyone: the median monthly asking rent just rose to a record $803 across the US.
Words, however do not do the relentless increase in rent justice, so here is something far better. Charts.
The same, only broken down by region.
And as we showed just two days ago, these are the cities where rents have increased by at least 10% in the past year:
Our condolences dear former members of what was once the world's most vibrant middle class and is anything but any more. Our only advice, the same as last quarter: BTFATH as you turn off the light, and pray that central banks never lose control of this so-called "market" or else having any roof above your head will promptly become an unaffordable luxury.... As many Chinese investors just found out the hard way.
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'Asking' rent?
That's not 'getting' rent is it? Which could be significantly lower.
You can't get blood from a stone...
Grab the popcorn and watch all of the "experts" laugh - wait, not just laugh but disdain, ridicule and berate Peter Schiff on Fox back in December 2006 for saying that we were no where near a "housing bottom".
https://www.youtube.com/watch?v=_HFNJw7xGSA
Those who forget history...you know the rest.
Talking about history, so glad we're redacting it at ever increasing rates these days in the name of political correctness.
Probably wind up working ever so well.....
That plunging line in the first graph... that's going to bottom out and rebound any day now. Any day now. Any day now.
Give it a couple years and the headline will be "Home ownership in the US lowest ever in recorded history"
Who wouldn't rent, with all the housing credits to illegals and others. Just don't expect it to only need a carpet cleaning for the next renter.
A dirty carpet may be the least of the landlord's problems. These days some renters are seriously destructive; my neighbor thought he could become a wealthy landlord after watching all the hype on TV. He bought two rentals. Lost his shirt in repairs and lawsuits ...huge holes in the wall in one and the other resulted in a big lawsuit when someone got hurt in it. They sued the tenant and landlord-him. Oh yeah, the eviction costs.
Have fun!
Sadly Handful, this is the end result of the "Entitlement Mentality".
~"Homeownership Drops To 48 Year Low; Median Asking Rent Soars To All Time High"~
I wonder if this is what Obama envisioned "Hope and Change" to be. The real question is how he could have ever thought it would end with anything but this. Talk about a mental deficit...
+1000
I would like to see property tax rates blended into this analysis somewhere.
In Houston, you could pay cash for a house, and then pay $1000 per/month for property taxes. Or $2,000+ if your in the $1 mill neighborhood.
if you buy a home, you're still renting from the tax man. The way I see it, everyone with an address is a renter regardless.
Ya hit the nail on the head with that one.
On what basis does any government tax you on what's yours?
Trading or transfer I can live with, but taking money off you for what you own?
That's stealing isn't it?
Or maybe you're just on the hook for the whole loan but you don't really own it anymore...
"On what basis does any government tax you on what's yours?"
The power to kill you with impunity.
I do weddings too.
Very true. And statistically, the areas run by the "compassionate" leftists have the highest property tax rates and are quickest to throw you and your family out on the street, selling your house for their missing cut, if you don't pay your rent (tax) - as they write laws against the repo man. Yep, compassion. They are SOoooo compassionate. Now give them your money so that they can buy more votes.
Works like a well is just another hole in the ground.
As long as the Feds can borrow and spend they will be able to force their opinion on the masses. When they run out of money to pay the stooges....there could be problems. Imagine the NOAA climate scientist who has been forced to skew the data for years. He finds out he is not getting a paycheck this month. What do you suppose his final report wwill look like? Or the cops being laid off. Will they be willing to put life at risk to do confiscation?
The Fed can remain detached from reality because they can now create it. This ends when the money fails to perform.
You can if you beat someone with it.
Hmmmm...
I could argue that one...
Where's that guy yelling THE RENTS TOO DAMN HIGH!
I'm over here...
It's the " Yes we can! " economy.
The problem really starts when they start taxing parking spaces for the people living in their cars.
No it isn't. When the bill arrives just park next door.
Fuck 'em...
Move to Canada where its perminantly 2006. Just imagine 2006 year after year after year. Its great !
Me, I'm still stuck in 1984...
The real economy is wrapped up by a python. As more serfs lose homes and more upper class need places to hide $$, rentals will increase. Already seeing it in my hood.
We would leave but where do you go? With prices inflated and poised to drop like a stone, you just can't logically make any kind of move right now.
pods
We're renting. And with the recent pluge in oil prices and all the oil and gas guys buggering off, we're moving.
Looking to cut my rent in half now...
Move to Canada. Its been over a year since oil prices collapsed. Calgary house prices still in 2006 range. Vancouver and Toronto are still rising. No sweat !
Yeah but the taxes suck...
golfed with an RBC realestate exec this weekend..he said toronto realestate is on fire..other parts of canada not so much..
fueled by foriegn buying ..a great system ship our wealth overseas and then sell our assets to those who got the business. the path to the third world just got shorter for all the west.
A comment RE California yesterday got me thinking... Incorporate a new business, get a personal loan to go into the new corp, buy a house in the corp, rent it back to self and write off all improvements, etc. within the corp. Forget the Schedule A mortgage deduction, use it all direct expense via corp. It would work for a while... but the downside of getting caught keeps me from digging deeper. I don't suggest this, i just can't stand my tax dollars going into this hole we still call America. We think about leaving weekly, but it is the same or worse everywhere.
Not only are you not the first person to think of this, you're probably not within 5 digits of the first. I wouldn't suggest it, as there are so many very easy ways to catch you doing it... You can rent a room to yourself for a home office or sometimes rent your house to your corp for business purposes, but there are a lot of caveats that go along with it...
pods
as Tom Petty said: The Waiting is the Hardest Part.
There is the fallacy of your conundrum right there, pods.
Insane times, insane actions.
15K property taxes.....FTW.
We can fix this all with $15 minimum wage.
Should I have said we can fix this all with $15 minimum wage and oral sex from Bernie Sanders?
You should have quit while you were ahead.
But we have no inflation. Old Yeller says that, so it must be true.
US inflation data is all fake.
If you plug in real inflation then GDP was 8.9% lower in 2014
Just look at how we fix inflation:
Chapwood Index shows real inflation in US.
In 2014, it was 9.7% - 1212% of official US inflation (0.8%)
http://www.chapwoodindex.com/
The Chapwood Index reflects the true cost-of-living increase in America. Updated and released twice a year, it reports the unadjusted actual cost and price fluctuation of the top 500 items on which Americans spend their after-tax dollars in the 50 largest cities in the nation.
Let's use a Zero Coupon Bond Calculator to see the effect of fake inflation on a $1000 bond for 30 years:
A zero coupon bond is a bond bought at a price lower than its face value, with the face value repaid at the time of maturity
With Fed's 0.8% fake inflation, Zero Coupon Bond Value = $787.38
With Chapwood inflation of 9.7%, Zero Coupon Bond Value = $62.20
So with Fed's inflation assumption, you can borrow $787.38 for 30 years and pay $212.62 as interest
With Chapwood inflation, you borrow $62.20 for 30 years and pay $937.80 as interest
With Chapwood Index, if you borrow $787.38 for 30 years, you pay $11,871 as interest. Or 55.83 times that with the Fed's inflation adjustment.
So in that sense, doesn't it make sense to take out a mortgage? Even though you're paying back the principle 30 years later, and not the interest, you're paying it in dollars worth far less. And your rent (mortgage payment) doesn't continue to inflate the way rents are.
I'm considering buying a house. Yes, at these insane levels. I think the Fed is going to turn on QE4 if anything goes wrong with their interest rate rising plan, and the real estate market is going to continue to blow up.
All that money's gotta go somewhere.
Sam... just don't. You will NOT like your future if you have taken your resources to "buy" a house in this economic mess.
I have 300+ hours of real estate and a lot of years of experience and I warn you ..... just don't.
This is exactly why Obama should be elected for another 6 terms. To rectal-fy these wrongs, to make housing available to every last single piker who doesn't have ownership and lets the place go all to crap on governmental money. In fact, by putting the section 8 debacles in with the Beverley Hills crowd might make somebody change their behavior. Assholes.
And another thing. It's all caused by Global Warming (Man Made, dontcha know)
https://stevengoddard.wordpress.com/2015/07/27/mind-blowing-temperature-...
http://www.dailymail.co.uk/news/article-3176630/Video-shows-Hillary-Clin...
Baby boomers are not helping things.....they never saved and need the remaining equity in their homes to pay their rent as they downsize.
They could do us younger people a favor and die.
Same to ya, son.
Wait until their dieoff to see a REAL slump in home prices. That coupled with their use of their offspring's money for their second homes in Florida and such will really get the prices going...downward. Japan 3.0? 3.8? coming soon to the USSA.
"That coupled with their use of their offspring's money for their second homes in Florida and such will really get the prices going...downward."
Do you mean Baby Boomers using their own money to buy a winter home in Florida then their kids selling it as part of the estate when they pass? I don't get how Baby Boomers would use their offspring's money. Identity theft?
Actually, most of us did save. However, we were promised a 7% return on our savings, and are now offered 0.75% "safe" return. So I guess we are to blame for not saving $6 million dollars each to fund our middle class retirement.
Sorry... I should have read the fine print.
If I show up in your bedroom, wearing nothing but a ski mask, with a raging hard on and a napkin of chloroform, are you going to believe me when I say I don't want to rape you? However, I doubt your apathy and naivety will keep you from stealing from me to pay for these "promises."
You weren't "promised" a 7% return. In fact, one could argue the risk-free return should be zero.
The Baby Boomers finished the gutting of the US economy. You guys are the ones who officially put "banana" in the term Banana Republic (not the shitty store owned by GAP). There is no patriotism left in this country, only greed.
I was happy to see half the generation did not save for retirement.
Clearly you are NOT "happy" with me then...... I can't WAIT to spoil your day...... My husband and I not only saved, but we lived far far beneath our "means"... And even worse, we bought 43 acres of property in a country that is now part of the BRICS group..... where the weather is good, the soil is fertile, the ocean is close, the people are decent family oriented human beings, ...... a property that has appreciated in value over the 20 years to a good peice of change in ANY currency today.
We saw the handwriting on the castle (empire?) walls, and paitently worked to make provisions for "what if"...... We never drew unemployment, or welfare... I still do not collect SS... I STILL work doing foot baths, massages, facials etc, and I am 76 years old.
But I know that that 43 acres is there secured and waiting if I need to have a place to go.
What we did takes some measure of courage, and I can't fathom why people in the US are scared, nervous, apprehensive, but still the are determined to "sit in the middle of the RR tracks, trying to figure out a way to survive the impact when the train hits them".... LEAVE the country for goodness sakes. If there is ever a day when "things get better", you can always come back to the US, (or whatever it is called then).
Long Tents!
Refugee Camps are the future with Boko Haram represented by Blackstone & .Gov monthly raids.
and the Dow soars........
But oil's up which'll stimulate the economy, dontchakno?
Aaaaarrarararaaggggghhhhh!
"Aaaaarrarararaaggggghhhhh!"
exactly....
Hell f'ing yeah. I'm lowering the home curve in just a few hours - and damn happy to be. To me it's another form of bondage - and not the good kind that ends with my oh face. If I buy again, it'll be for as much cash as I can put down and on a property that can produce a little income or at least something I can put a kickass bunker on.
A home is a cage. It limits mobility, ties your person to a cell block number
.Gov approves.
Yeah, but once you do, you will wonder if you should have fled the USA. I think it all the time but have no idea where we should go. So we stay, day after day waiting...watching more and more tatooed and tribals waiting tables at the finer dining establishments. American Exceptionalism. The tat artists are really really really good here.
why should anyone buy a home?
If you have no children, should you pay ridiculous real estate taxes to support a public school system that clearly doesn't work despite huge amounts of dollars being spent?
Do you want the upkeep? Do you want to even apply for a mortgage and jump through an anal Vulcan probe to discover where you obtained all of that down payment and can you account for every fucking dollar for the last six months? Have you played the FICO game?
The tax write off could be eliminated at any moment by the aristocracy in Congress--don't ever think anything is sacrosanct when the government is basically broke and revenue is needed from all sources.
The alternative is renting, and being at the mercy of some jerkoff landlord. No thanks.
That's what a lot of the posters here don't value. Sure the taxes, zoning laws and everything else can be a pain in the ass. But the ability to own a home is an important part of the free market system. These rents couldn't be raised if not for the FED propping up purchase prices. As you so succinctly put jerkoff landlords are everywhere. However when you can actually purchase a home you have leverage. Fuck the landlord your taking control of your housing costs. Not only that there is something to be said for painting your house whatever awful color you want to piss off the neighbors. Or remodeling a kitchen with a dedicated beer frige just because YOU WANT TO.
All of you singing the praises of renting, I get it. And renting sure enough has it's place. But this currently unsustainable imbalance between ownership and renting being juiced by the FED is ruining both options. Not to mention raising what is people's largest fixed cost to stratospheric highs at a time of epic overcapacity and lack of consumer demand is wholly stupid. This is why I'm sure the FED is going to pop Housing Bubble 2.0. Lower people's fixed housing costs and maybe they can buy some of the shit the S&P is selling and those full-retard PE ratios will come down a bit.
Aside from the fact that from a fundamental level, I cannot understand how renting would ever be cheaper than owning, on average... all of those expenses are passed on to the renter and, if not, then the landlord gets the fuck out of the business.
On some level, the positives and negatives all equal out. Something akin to leasing or owning an automobile. One never wins at either, one just thinks one does. Also life stages, age and earned income all factor into it.
I would love to own a home. However I can't persuade the wife to move to Green Acres forty miles away from suburbia. Too long a commute. No place to shop. Etc. But I just endured making an application for a mortgage and midway said I don't have to take this anymore, got up and left. To me it was incredibly invasive and just not worth it. So it's my choice to rent but I do miss a house.
The government has to make sure you didn't get your money from terrorist. I can assure you it has nothing to do with capital controls. /sarcasm.
that jerk landlord now is Wall Street firm like Blackstone the largest homeowner in the country....having access to unlimited 0% rate money has its bennies. Going to be millions in bonuses to screw the little guy!
The school system is working just fine. Your children are being (re)educated to the finest government standards. It doesn't take a genoius to realize that the system propagates itself through education.
You are right.
Why not just use the "legal system" for what it is. An enforcement tool on the ignorant.
With a name like yours I would guess you know already. Even as a whore your coporation enters into contract negotiation.
dupe
Rents don't drive markets, as sad as that is to say. If you examine the lead up before all real crashes, like 1929, rents were soaring and people were struggling. Rents are not forerunner for things to come.
Crashes happen when people, the masses of people start getting desperate, and are looking for avenues "to make it." You know the "madness of crowds" and all that stuff. And we are far, far from that yet.
The super rise is coming, I am sure of it. There is no way that governments and Central Bankers are going to correct whats wrong with markets now - that is, they need to raise interest rates.
There is going to come some serious super-charging soon. And when it comes, enjoy it while it lasts, for when it ends, it will not matter how much money you have, for money will not count. What will count is what connections you have with the corrupt governments, that will protect your wealth; check history, its how it works.
Enjoy what is going to come people! And remember what I said a while ago...
WHEN I SEE YOU ALL IN HELL, BRING THE CONGNAC!
For those not in the know; wine is for heaven, beer is for Earth, and only the best congnac is allowed in hell!
Rent i do. No stress and throw the light switch off when i leave to go fishing, shooting, whatever. Don't fooking care. No ladders to climb, roof to fix.
instead of climbing the laddder, you are paying your landlord EXTRA money each month for him to climb the ladder. pay me now or pay me later, you are still paying to fix the roof.
If you dont own a home, where will the 'RESCUE' MRAP go to confiscate your firearms and take you to funcamp?
To the place you rent and live, duh.
We need a national rent registry! /sarcasm.
Plan B in effect.
The University system should now focus exclusively on teaching kids how to live on the streets.
Somehow, as a matter of public policy, Western goverments have decided that everyone over 60 should be rich, while everyon under 30 should be homeless.
Makes perfect sense if you look at voting behavior by age cohort.
Meanwhile the lying pimps at the National Association of Realtors are shitting skittles and puking rainbows.
This is some scary shit. I am not reading a lot about foreclosures out there so one could assume 48 year low for homownership means 48 year high for investors ( i.e. spectulators). That's the real story. Need to toss a chart of HELOC orginations up; Equifax reported in March a 6 year high for these. Tells me people borrowing money again from the appreciation to buy rentals. These were the first to go in the housing crunch of 2008, especially in nonrecourse states ( free call option ). Most of those high rental cities are non-recourse states.This is telling me it's bigger this time and that once the leveraged assets fall in value we are in a massive shit storm again.
Well I'm sure all the millennials will be buying all the boomers houses as they downsize right after they buy a brand new car. Google millennial and today's top stories are.
1 Why millennials are leasing more cars than ever.
2 Why Millennials Are Better Off Waiting 10 Years to Buy a Home.
3 Millennials in Denver want to buy homes, but not now.
Paging Lawrence Yun
leasing a car means you are paying the depreciation so someone ele can then come in later and buy the car for its true value. If you can't "afford" to buy a car for cash or at least with a 3-year loan, you can;t afford the car. when the lease is up, unless you plunk down a stack of cash, you turn the car back in, plus the cost of additional wear and tear, excess miles and what have you. car leases are WAY to often a BIG waste of money. But heh, I can drive a fancy car for 100 bucks a month
San Francisco, Oakland, and Berkeley all have had rent control for many years. So landlords, damn their little souls, have resorted to evictions with fake charges, fake restructuring, whatever they can to get people out (once someone has moved, the new unit can be rented at any level). In reponse to these criminal landlords, the nearby city of Richmond instituted rent control last week with severe restrictions on evictions. I imagine the whole Bay Area will be under rent control, as predatory landlords continue to screw renters as much as possible.
The entire 'home ownership' meme needs a remodel... Just because a bank approved your loan and now you can settle into 20-odd years of monthly-mortgage payment bliss, doth not a homeowner make. In fact, even after that last payment, your yearly 'rent' to the 'State' NEVER ENDS. Just try missing one or two of those payments and see how long you remain an 'owner' of anything. The whole concept is upside-down.
Words wordsworth.
Words have power, home ownership, car ownership, boat ownershp. What makes you an owner of something you haven't paid for? People are simple creatures, they're easy to manipulate with words and sentiments.
In reality these "ownership scams" are exactly that, scams. You spend 3x the cost of the home "buying" it just paying the mortgage (til death) alone, all the while you pay insurance, taxes, maintenance costs and any actual equity in your property is being quickly inflated away. When you're done paying the loan off you sign up to continue paying rent to whatever .gov has the right to boot you and sell your "purchased" property out from under you.
The system has devised a way of talking people into their scams using words instead of guns, words tend to have more power.
try missing a rent payment and see what happens.
Do you own a car? no you don't cause you have to pay taxes, insurance, license tags etc see what happens if you miss one of those payments.
Sorry but these charts are a joke. US Homeownership has been in a bubble since roughly 1941 and we are absolutely nowhere near the bottom. In fact all of the most bubblicious growth occurred before 1965 and makes the Great Housing Bubble look positively quaint.
These "historical" charts shown here and elsewhere in the MSM never go back before some point in the mid 60s, usually only to the 80s (when the first bubble phase ended), thus they offer no historical perspective; I would say they are intentionally deceptive. Now you'll see why.
http://www.mybudget360.com/wp-content/uploads/2009/01/home-ownership-rat...
We ain't seen jack shit - yet. When they start having to extend the low end of the X axis to take us back to the 50s and 40s, well, I told you so. The long term historical trend line is in the 4th decile. I wonder at what percentile do we get to call it (rent) serfdom again?
tl;dr: MEAN REVERSION
Unless you have actually paid off your house, you do not own your house, the bank does. If you have paid it off and you refinance, the bank owns your house again. In all cases, if you don't pay your property taxes, the government will own your house. We are all renters, just some people like to pretend they actually own something.
The big paper profits you might have made on your house in the recent bubble are not real profits. Profits are not real until you sell. If you sell you will have a difficult time finding a comparable house in your area that you can afford. Welcome to house prison. You can always get out of jail by moving to Alabama or rent an apartment.
Your first paragraph points are discussed in the communist manifesto by the jew Karl Marx:
http://mk.christogenea.org/references/communist-manifesto
The democrats are aiming for the USSR no private ownership....just oligachs economy!
I like to rent so I can flush the toilet as often as I like (I have to flush it a lot with these low-flow toilets), run hot water as often as I like, run cold water as long as I like, not put out those three trash barrels I see in front of every house, not recycle, let someone else do the maintenance, and get out quickly when the big one destroys all the houses and apartments (this is California). All my stuff is backed up in the cloud. I would miss my car if it got wiped out as a result of the big one, that's about all.
Tylers,
Can you fix the way the website runs (is it just me that gets stuck on pages loading?) and do an article updating us on bank owned "shadow inventory." How many properties are banks still hiding on their balance sheets to prop up home prices by limiting available home inventory (contributing to the bubble).
If it weren't for the Fed housing prices would have bottomed, but they are propping up our TBTF banking system.
US homeownership is not down at all.....
it's just that the new homeowners are now banks
and outfits like Blackrock--not American families
new all time high in rent? wait, according to so many on this site, it's never a bad time to rent. renting is always the answer
Why do so many people assume that home ownership is a good idea?
It is better for the economy if people have an easier time packing up and moving where the jobs are, and renters are generaly happier than homeowners.
The only time home ownership is a positive idea is if you use the housing market as a barometer for the whole economy.