Overnight 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 do not currently own a home and say they do not think they will buy a home in "the foreseeable future," has 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 have stayed essentially the same, 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."
Shortly thereafter, 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 tumbling from 64.0% to 63.7%, which is tied for the lowest historic print since the first quarter of 1986, with the only difference that then the trendline was higher. Now, as can be seen on the chart below, it isn't. 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.
There is no surprise why this is happening. As Bloomberg notes, "entry-level buyers are struggling to save enough money to purchase homes as gains in U.S. real estate prices outstrip increases in wages, while mortgage lending remains tight. The median household income in March grew 2.1 percent from a year earlier while the median home price gained 7.8 percent in the same period. Last year, the share of home purchases by first-time buyers fell to the lowest level in almost three decades, according to the National Association of Realtors."
“The No. 1 issue in the housing market right now is wages,” said Jay Morelock, an economist with FTN Financial in New York. “For the housing recovery to be sustainable in the long run, we have to see wages increase at a faster pace.”
Now that, as we have shown previously, is a big problem especially for non-supervisory workers in America, whose nominal wage growth is now rapidly approaching the level last seen just after the great financial crisis.
But the 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. From Bloomberg:
As homeownership falls, demand for rental housing is booming. The vacancy rate for rented homes in the U.S. fell to 7.1 percent in the first quarter from 8.3 percent a year earlier, the Census Bureau report showed. It was the lowest first-quarter rate since 1986. The median monthly asking rent was a record $799, according to the agency.
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.
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: 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.