Is This The Recovery In Housing They Wanted?

Tyler Durden's picture

A mortgage market that is practically 100% government-driven, impossibly low rates for impractically long periods of time, no MtM concerns to clear delinquent or foreclosed property from bank balance sheets, and sure enough 'prices' for the houses that are being sold have risen. But there's a rather worrisome unintended (we presume) consequence of this 'recovery'. As BofAML notes today, the US has shifted to renting at the dramatic expense of homeownership...

 

 

From 2007 through 2012, there have been over 5 million new renters, which came at the expense of 1.2 million fewer homeowners.

This shift pushed the homeownership rate to 65%, the lowest since mid-1995. The increase in renting has been driven by two key factors: 1) foreclosures forced many homeowners to become renters, and 2) tight credit conditions with an uncertain outlook for home prices encouraged households to rent.

 

Chart: BofAML

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LetThemEatRand's picture

But Quiver Lip the Great (aka The Bernanke) promised us that he could fix everything, and the banks kindly kept people in their foreclosed homes for years to allow the bubble to reflate because they love us and want us to have shelter.  

LetThemEatRand's picture

"All I need are some tasty waves, a cool buzz, and endless POMO and I'm fine."  Jamie Spicoli.

"Fuck the serfs."  Lloyd Hand.

 

NuckingFuts's picture

LTER, I never figured you to quote Fast Times.  +1 

kaiserhoff's picture

It's not just a house.  It's a home.

And an opportunity for crystal meth/crack cocaine entrepreneurship.

LetThemEatRand's picture

New entry on Real Estate sales disclosure form:  "did they make the blue stuff or the shit?"

CheapBastard's picture

It's going to get Spicy when renters stop paying their rent.....how many can you evict a month? The courts are already back-logged and clogged with cases. IN many cases, if the Landlord loses one month's rent, he has lost his profits for that entire year.

 

 

buzzsaw99's picture

Many people have no intention of paying off their mortgage anymore. They will take cash out refis and spend it on junk. That is what the bankers want, the country leveraged to the hilt to feed the trade deficit so they can get a bonus from the destruction of the country.

Dingleberry's picture

True. I read an articl recently about a mortgage servicer that said she rarely saw a payoff anymore, nearly alway refinanced.

Spoke to a builder about possibly doing a build for me. It managed to stay alive during the crash (which is a miracle in itself, everyone else went BK). He said he doesn't build much over 2000 sq feet anymore, ranch styles to boot. The McMansion days appear to be suspended indefinitely.

Frastric's picture

We are virtually in a matrix of our own making. We have smartphone addiction, ever-growing dependency on government, confirmation bias, debt slavery, addictions to money, cars, credit, alcohol and sex, tv and social networking has now replaced the need for talking at length with someone or even having a meaning conversation.

Nearly all of us are tainted by this matrix (myself included) and most are attached to it to the point where seperation is inconceivable, while there are a few who are and are there own masters. The movie Naqoyqatsi had an expression; life as war. Well we're waging war on what is to be human and at times it feels like this nightmare...

q99x2's picture

They've moved into the bushes round where I live.

Dr. Sandi's picture

You know you're in trouble when the Bushes move in 'round where you live.

glenlloyd's picture

I have a sneaking suspicion that despite the falling prices owning a house is going to get a lot more expensive in the coming decade...between increases in the cost of utilities, insurance and property taxes it just won't pay to take on the responsibility of a home...and a yard...and all that freaking maintenance...and pretend to get a long with neighbors.

otto skorzeny's picture

houses are fucking $ pits- that's why the govt wants everyone to own one- to keep the ponzi going a while longer. renters don't have any incentive to do anything except put some furniture in a rented property.

Handful of Dust's picture

otto, good point...also renters have no incentive to add to the neighborhood since they have no stake in that communities' future. Who cares if crime rises? I'm moving. Who cares if the lawns are unmowed and a bunch of Section 8'ers move in down the street ...and so on?....I'm moving. "I don't own the place so I don't care."

 

the author misses this 3rd pint for rneting...namely, it's an extremely mobile nation now where few stay in on eplace lo nger then 4-5 years. No incentive there to buy either.

CoolBeans's picture

Not ALL renters-Some are long-term, have nice families and are contributing to neighborhoods that would otherwise be full of run-down rat traps.  Some seek some normalcy after what happened to their families thanks to the economy.

NEOSERF's picture

If they start messing with the interest deduction, game over for home ownership, it really is the only point, with all the cost, maintenance and headaches, having a tax writeoff makes it bearable.

zipit's picture

Shutup and be thankful for your McJob, Debt Slave.

Seasmoke's picture

If everyone just stopped paying the mortgage. This recovery would be really moving in the right direction.

otto skorzeny's picture

That's bullshit-any losses will be made good to the banks via the what's left of the middle/working class taxpayer. There is no downside risk in ANYTHING thanks to Ben Shalom.

gwar5's picture

Saw the rental thing coming a couple years ago so I started buying rental homes on rural arable land. They pay me rent and a share of the food they grow. Haven't heard of anybody else doing this new alternative lifestyle so I just started calling it sharecropping. 

 

CoolBeans's picture

A new "old" way of doing things - things serfs' arrangements with their lords/land owners way back when and across the pond.  What a great arrangement you've set up!

lolmao500's picture

Here's how you solve this : ban rental.

Nue's picture

Yes and we can outlaw Homelessness as well. Go long Private Prison contractors.

Never One Roach's picture

Why buy anymore? It's old thinking. People need to move now much more often for jobs...for family....for cheaper locations...and so on. If you are lcoked down by a mortgage and ownership, it can take months to sell if the market i snot perfect. As interest rates rise, this RE market will become very adverse to sellers as affordability plunges. Remember how much wages have increased the past decade? Almost zero if I remember correctly..

NEOSERF's picture

For rent: My old car which sits out on the main road...taxes $0, wrap around ocean view, bucket beds, stereo, skylight and outhouse...$1200/mo.  Utilities not included.

goldenbuddha454's picture

Its also about jobs and credit which few people have as of yet.  When (good) jobs come back, home ownership will come back.  When that will be?-NEVER!

DaveA's picture

That chart needs a third color for "squatters".