Home-Buying Hope Crashes To 5-Year Low, Drags Consumer Confidence Lower

Americans' confidence in the economy has waned slightly following Hurricanes Harvey and Irma, which caused more than $100 billion in damage, pushed up gas prices and spurred a jump in unemployment filings.

Overall, Bloomberg reports that the share of consumers expecting good times financially in the economy fell to 47 percent from 54 percent in August.

Share of consumers judging home-buying conditions as favorable was at five-year low...

 

Richard Curtin, director of the University of Michigan consumer survey, said in a statement.

In the past year, there has been a long list of issues that could have derailed the overall level of consumer confidence, including the unprecedented partisan divide, North Korea, Charlottesville, and the hurricanes,” 

 

“Confidence has nonetheless remained very favorable, moving sideward in a very narrow positive range.”

Comments

Garciathinksso Sep 29, 2017 12:30 PM Permalink

I have worked in the real estate market for years.  its cazy now the number of borrowers that take a loan out against their 401K.  I see even H1B and green card folks  with loads of debt, hoping to live the American dream,lol

canisdirus Garciathinksso Sep 29, 2017 2:17 PM Permalink

My wife's 32-year-old cousin recently liquidated his 401(k) (taking the tax hit straight on) so he could afford to make a 5% down payment on a house. His sister, my wife, and I think that was a really stupid move, but it's what people have to do. He's been married longer than we have been, but they didn't even live together until a couple months ago due to the lack of somewhere they could both live...

In reply to by Garciathinksso

LawsofPhysics Sep 29, 2017 10:57 AM Permalink

LOL!  Again, talking about the "price" of anything in the absence of a mechanism for true price discovery is fucking stupid.Oh well, stupid is as stupid does..."Full FAITH and Credit"

Kernighan Sep 29, 2017 10:52 AM Permalink

Housing is "overbought".  Prices are far too high in certain major markets like the Bay Area, and Los Angeles.  Millenials have little hope of affording a single family house at these prices.  This is caused by the way home loans are underwritten.  Loan value is based upon property value, and property values are normally assessed using three methods, but ONE always wins out:  Market comparison. Since market comparison leads to appraised valuation, and appraised valuation leads to loan value we have a feedback loop:Property Price => down pyt + loan amount => appraised value => market comparisonso, in places like mentioned above the feedback loop raises and raises prices until even any down payment becomes prohibitive.  And, only once monthly payments reach absurd levels does anything interupt the endless price rise. 

canisdirus Kernighan Sep 29, 2017 2:10 PM Permalink

This was basically how the housing bubble happened. Everyone screamed "subprime", but the mortgages that had the biggest losses were prime and seconds/HELOCs. The entire industry was in on it (and they still are, having bought a house recently) - appraisers, loan officers, RE agents, title companies, etc. The only people that are even marginally on the up-and-up are the escrow companies. If you follow the whole feedback loop that you've clearly seen, you'll see how housing prices always rise and only decline when a serious economic downturn occurs.The other problem is that down payments change loan amount that will be issued. You can get 5-10% down loans with zero PMI with ease these days. So take a house that was $60k in 1985 when a boomer was about 25, which now is worth $800k, and they can sell it and trade into something well into the millions with ease. Or they could take 200k, get a 2M house, and buy a couple starter homes with the remainder that they rent to some millennials. You just can't even get a foodhold when you can't save anything and prices don't need to come anywhere near costs. I don't know why they issue 30-year conventional mortgages to people in their mid-50s, but I wish they'd stop because it just drives prices ever higher. Most of these people would never live long enough to pay them off.It seems like people with property are disconnecting from those without. If you were born to a family that never owned anything, your chances of owning property diminish by the day.

In reply to by Kernighan

clickety-clack Kernighan Sep 29, 2017 1:34 PM Permalink

Where I live, the Kalifornia refugees are hoovering up every single new house under 600K.  Nobody is building houses under 350K. The sugar beet fields are getting paved over as fast as a D-9 cat can punch in roads and clear the way for paving crews. I can picture all of the bankers rubbing their little hands together.Forget trying to buy anything if you are a local resident.

In reply to by Kernighan

Endgame Napoleon Kernighan Sep 29, 2017 12:20 PM Permalink

I do feel sorry for the millennial generation in this area. They should have a better chance at the security and independence of a home.

One of the big problems is unsafe, affordable neighborhoods. Our government has facilitated the bifurcated social-engineering concept of 1) the two-earner household and 2) the single-earner/single-parent household for decades, using social-engineering in the welfare and tax codes to prop these groups up.

Dual-earner and single-parent households have also been been promoted culturally.

It has concentrated wealth from salaried jobs at the top through assortative mating, and at the bottom, it has driven wages down for breadwinners, whether they are male fathers or single, childless women, by flooding the job market with moms who do not need higher pay due to spousal income, child support or an array of monthly welfare and child tax credits up to $6,269.

We now have 62% of households headed by single parents.

All of this pay-per-child social engineering has bad results. The US has 5% of the world's population and 25% of its prisoners, and no matter how often liberals say crime rates are down, people know that many neighborhoods with the more affordable houses are not safe, although the same neighborhoods were safe back in the day of the stay-at-home mom.

We now have a ton of unsafe neighborhoods, and surprise, many millennials do not wish to smother themselves in debt to buy homes in those areas, even if they had the downpayment. And they do not when working in $10 to $12-per-hour churn jobs.

In reply to by Kernighan

itstippy Endgame Napoleon Sep 29, 2017 12:59 PM Permalink

Endgame, I've read your posts for some time now and I feel for you. Back in the day, the single working man was flush with cash.  No kids, no wife, good job, plenty of dough and leisure time to spend it.  They drove Corvettes and Road Runners and custom motorcycles.  They had bachelor pad appartments and plenty of young ladies interested in dating them.  The parking lot of the Oscar Mayer meat packing plant was row upon row of Chevelle Super Sports, Camaro Z28s and Dodge Power Wagons.  Their biggest worry was getting drafted, uprooted, and sent to some Godforsaken jungle in SouthEast Asia.Now the single working man is at the economic bottom rung.  That sucks. 

In reply to by Endgame Napoleon

kahplunk Sep 29, 2017 10:46 AM Permalink

No shit Sherlock. I make over 100k/ year and I still cannot afford a home for my family unless I am willing to move to an area filled with gangs, Illegals and drug addicts.

Endgame Napoleon kahplunk Sep 29, 2017 12:06 PM Permalink

If you can, move to the South. It is a brutal place to live for middle-aged and older, childless, single people who make between $20k and $30k per year, with most college grads even making around $25k in most offices.

The per-capital income in my state is $19k.

But the parents stick together in workplaces in the extreme, hiring / retaining almost all fellow parents and taking tons of excused time off for kids in absenteeism gangs,

Some of the family-friendly employees make the same wages you describe, but the housing is so much more affordable for the dual, high-earner couples, certainly more affordable than in those coastal blue states.

It is a different story when you must cover rent and all other bills on between $20k and $25k in earned-only and often unreliable income. There is no UC between churn jobs to help with rent, not for the childless people who must compete with tons of welfare-fueled mom workers who have free rent, free food and child tax credits of up to $6,269 and with tons of mom workers with spousal income that, likewise, makes low wages palatable. I will have to move, even though it is unaffordable to move.

But if I had the all-important, Southern work qualification of parenthood, I would definitely move here. Being a parent trumps degrees, "legally required" licenses, work experience, number of new business sales generated, number of accounts retained, number of [whole] days worked, etc. Family friendly it is, indeed.

In reply to by kahplunk

Ryland kahplunk Sep 29, 2017 11:10 AM Permalink

No, you just need to move to small town America in flyover country. I bought a house for under 50k, redid the whole thing for another 50k. My town looks like Mayberry, with nice people that wave at you when driving the opposite way on the road. No crime, people don't lock their doors and my daughters forth grade class has 10 other kids in it. If you move to a place that still has American values it's wonderful! Psst.....don't tell anyone else outside of places like this or we may have "undocumented" or "refuges" ruin it.

In reply to by kahplunk

Ryland kahplunk Sep 29, 2017 12:22 PM Permalink

Yes Sir, we have a large employer in town but even the low wage workers have a great income to cost of living. Walmart pays $13 hr starting minimum for any job and I even saw a sign at McDonald's that says that pay $11 to start. The market fundamentals actually make sense here because we don't have "undocumented" driving down wages, so if someone tried to pay less they wouldn't be able to find workers.

In reply to by kahplunk

Seasmoke Sep 29, 2017 10:39 AM Permalink

With Trump tax plan to kill the middle class taking away propery tax, who is foolish enough to buy over priced boxes with roofs in California. New York. New Jersey. Connecticut and even Texas !!!!!

j0nx Sep 29, 2017 10:37 AM Permalink

Prices have gone nowhere in the off season here in NoVa area. Usually they drop some around september-February. Not this year. At least not in my area. Supply is still very low.

FreeShitter Sep 29, 2017 10:25 AM Permalink

Ah the good times...remember that? When white women looked good with no tats, were thin/athletic, had a nice trimmed bush...rock music was the shit We had a good saving's rate in the bank. Movies were actually entertaining....yeah those times.

canisdirus Consuelo Sep 29, 2017 1:47 PM Permalink

We millennials have been shaving all our lives, so it dates at least to the mid-late 1990s. It has been going strong since the early 2000s, for sure.It all went off the rails in about 1965, it just takes a long time to turn the ship. Most of us young people have never seen a normal world, what we know today is about as normal as it gets. You can blame all levels of education being taken over by marxists for most of it.

In reply to by Consuelo