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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Mon, 06/24/2013 - 21:46 | 3689506 LetThemEatRand
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.  

Mon, 06/24/2013 - 21:56 | 3689561 zorba THE GREEK
zorba THE GREEK's picture

Serf's up.

Mon, 06/24/2013 - 22:06 | 3689595 LetThemEatRand
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.


Mon, 06/24/2013 - 23:49 | 3689856 NuckingFuts
NuckingFuts's picture

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

Mon, 06/24/2013 - 22:07 | 3689612 kaiserhoff
kaiserhoff's picture

It's not just a house.  It's a home.

And an opportunity for crystal meth/crack cocaine entrepreneurship.

Mon, 06/24/2013 - 22:12 | 3689621 LetThemEatRand
LetThemEatRand's picture

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

Tue, 06/25/2013 - 08:07 | 3690460 Metalredneck
Metalredneck's picture

"Chili P., YO!!!"

Mon, 06/24/2013 - 23:26 | 3689815 Go Tribe
Go Tribe's picture

What's wrong with renting?

Mon, 06/24/2013 - 23:43 | 3689841 CheapBastard
CheapBastard's picture

It's going to get Spicy when renters stop paying their 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.



Mon, 06/24/2013 - 21:48 | 3689534 buzzsaw99
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.

Mon, 06/24/2013 - 22:30 | 3689662 Dingleberry
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.

Mon, 06/24/2013 - 21:50 | 3689538 Frastric
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...

Mon, 06/24/2013 - 21:50 | 3689542 q99x2
q99x2's picture

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

Tue, 06/25/2013 - 03:03 | 3690185 Dr. Sandi
Dr. Sandi's picture

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

Mon, 06/24/2013 - 22:01 | 3689586 glenlloyd
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.

Mon, 06/24/2013 - 22:01 | 3689590 otto skorzeny
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.

Tue, 06/25/2013 - 00:42 | 3689981 Handful of Dust
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.

Tue, 06/25/2013 - 09:29 | 3690772 CoolBeans
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.

Tue, 06/25/2013 - 07:57 | 3690428 NEOSERF
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.

Tue, 06/25/2013 - 08:25 | 3690502 zipit
zipit's picture

Shutup and be thankful for your McJob, Debt Slave.

Mon, 06/24/2013 - 22:05 | 3689606 Seasmoke
Seasmoke's picture

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

Mon, 06/24/2013 - 22:21 | 3689644 otto skorzeny
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.

Mon, 06/24/2013 - 22:06 | 3689608 gwar5
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. 


Tue, 06/25/2013 - 09:26 | 3690752 CoolBeans
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!

Mon, 06/24/2013 - 22:30 | 3689669 lolmao500
lolmao500's picture

Here's how you solve this : ban rental.

Mon, 06/24/2013 - 23:41 | 3689837 Nue
Nue's picture

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

Mon, 06/24/2013 - 23:47 | 3689850 Never One Roach
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..

Tue, 06/25/2013 - 07:59 | 3690437 NEOSERF
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.

Tue, 06/25/2013 - 08:17 | 3690489 goldenbuddha454
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!

Tue, 06/25/2013 - 10:25 | 3691020 DaveA
DaveA's picture

That chart needs a third color for "squatters".

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