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Rents Soar To Record High As Homeownership Rate Plunges To 19 Year Low
Zero Hedge ^ | 04/29/2014 | Tyler Durden

Posted on 04/29/2014 1:43:52 PM PDT by SeekAndFind

Each quarter, when we perform our regular update on trends in US homeownership and rents using Census Bureau data, we say that "The American Homeownership Dream is officially dead. Long live the New Normal American Dream: Renting." One thing we added in 2013 is that the American Dream has now officially became a full-blown nightmare after mortgage rates exploded, even if declining modestly afterward, and in the process pummeling the affordability of housing as well as grounding any new mortgage-funded transactions to a complete halt (don't believe us - just ask the tens of thousands of mortgage brokers let go by the TBTF banks in the past 6 months) while sending mortgage origination activity to record lows. Which is why it was not at all surprising to find that the just updated Q1 homeownership rate was 64.8% - the lowest in 19 years!

 

Furthermore, even as household formation has continued to implode (more on that in a subsequent post) despite the shrill promises of housing bulls who still have to realize that the transitory pick up in home prices has nothing to do with organic growth or a stable consumer, and all to do with the Fed's balance sheet, the now effectively finished REO-To-Rent program, and illegal offshore cash parked in the US, Americans have to live somewhere. That somewhere is as renters of Wall Street and other landlords. As the next chart shows, the median asking rent has soared to fresh records and hitting an all time high of $766 as of the first quarter.

 

Luckily Owner Equivalent Rent is largely adjusted (hedonically) by the Fed in its CPI calculation making it seem quite friendly, or else its all time highs may give the impression that inflation is not quite as dead as the Fed portrays it. Although don't tell that to renters in the Northeast, where the average rent just soared to $1,043, a record increase of 16%, or $147 compared to a year ago.

At least one entity is enjoying this wealth extraction from the middle class which no longer being able to afford buying a home is forced to hand over an ever greater portion of its paycheck to America's largest landlord - Wall Street's very own Blackstone.

 

Finally, why are any of these upward trends in significant jeopardy? Because while the 0.01% are getting wealthier by the day, everyone else... isn't. As can be seen on the chart below.



TOPICS: Business/Economy; Society
KEYWORDS: housing; rents

1 posted on 04/29/2014 1:43:52 PM PDT by SeekAndFind
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Comment #2 Removed by Moderator

To: SeekAndFind
I see a lot of BS here.

Because while the 0.01% are getting wealthier by the day, everyone else... isn't. As can be seen on the chart below.

Liberal leftist BS.

3 posted on 04/29/2014 1:48:17 PM PDT by Responsibility2nd (NO LIBS. This Means Liberals and (L)libertarians! Same Thing. NO LIBS!!)
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To: SeekAndFind

KDVR ran a story about two weeks ago about apartment and condo rents in the greater Denver area.

Avg cost is $1500 for a 900sq ft. apt or condo per month...can’t find decent ones; 2 beds and baths for much under $2,000.

Denver is sprawling northwards at a tremendous rate. New housing construction in the neighborhoods around me is growing, dozens of lots sold and houses going up like crazy.

HOUSE values are up up up too. Guy across the street sold for $375K with purchase price in 2006 at $260K. It was on the market for three days.


4 posted on 04/29/2014 1:53:49 PM PDT by GRRRRR (He'll NEVER be my President, FUBO! Treason is the Reason! Impeach the Kenyan)
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To: SeekAndFind

KDVR ran a story about two weeks ago about apartment and condo rents in the greater Denver area.

Avg cost is $1500 for a 900sq ft. apt or condo per month...can’t find decent ones; 2 beds and baths for much under $2,000.

Denver is sprawling northwards at a tremendous rate. New housing construction in the neighborhoods around me is growing, dozens of lots sold and houses going up like crazy.

HOUSE values are up up up too. Guy across the street sold for $375K with purchase price in 2006 at $260K. It was on the market for three days.


5 posted on 04/29/2014 1:53:49 PM PDT by GRRRRR (He'll NEVER be my President, FUBO! Treason is the Reason! Impeach the Kenyan)
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To: SeekAndFind

Why do you need to buy houses when so many just live together until the next guy/gal comes along. Long term marriage and children with two parents are things of the past for the most part. The culture has changed.


6 posted on 04/29/2014 1:56:58 PM PDT by Hattie
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To: Responsibility2nd

Yeah, you have to be a special kind of libtarded to think that

BECAUSE

someone else is getting rich, everyone else can’t.


7 posted on 04/29/2014 1:56:59 PM PDT by MrB (The difference between a Humanist and a Satanist - the latter admits whom he's working for)
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To: F15Eagle
""Lack of jobs, offshoring, illegal immigration""

We haven't seen anything yet...It's just started...Next to take the big hits are *anything* high end...like cars, boats etc...

Those coming up in their 20s, and 30s for the most part won't be buying homes, refrigerators, high end cars, boats, room additions, pools etc....

8 posted on 04/29/2014 1:57:00 PM PDT by dragnet2 (Diversion and evasion are tools of deceit)
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To: SeekAndFind
...and Wall St. machers are buying up trailer parks and having drug addicts collecting rent. Soylent Green is close at hand!
9 posted on 04/29/2014 2:05:09 PM PDT by miss marmelstein (Richard Lives Yet!)
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To: SeekAndFind

Bring back a Bush! (Ducks , covers)

Just kidding..


10 posted on 04/29/2014 2:06:49 PM PDT by NormsRevenge (Semper Fi - Revolution is a'brewin!!!)
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To: miss marmelstein

Gluten Free.


11 posted on 04/29/2014 2:07:38 PM PDT by NormsRevenge (Semper Fi - Revolution is a'brewin!!!)
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To: Hattie

Bingo.

If the housing market has slowed; it is a direct result of the social and economic choices people are making today.

It used to be that you got an education, got married, started a family and bought a home. The American Dream.

Well guess what? That dream is still attainable if you follow these directions.

But in our hook-up culture with divorce as common as dirt - we are naturally going to see the economic downsides - like lower rates of homeownership.


12 posted on 04/29/2014 2:08:10 PM PDT by Responsibility2nd (NO LIBS. This Means Liberals and (L)libertarians! Same Thing. NO LIBS!!)
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To: SeekAndFind

I have noticed this. It’s because the economic situation in the USA is really bad. Far worse than the media admits to. Real jobs are impossible to get, unless you are not an American citizen or wear dreadlocks or were one sex and now act like another or hate this county and swear to blow it to bits while shouting religious slogans.


13 posted on 04/29/2014 2:19:45 PM PDT by I want the USA back (Media: completely irresponsible. Complicit in the destruction of this country.)
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To: SeekAndFind

A big factor in both the rent price and falling home ownership is property taxes. Where I live, property taxes have become just as expensive as the monthly P&I payment. Very soon, it will be more.


14 posted on 04/29/2014 2:28:28 PM PDT by rbg81
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To: dragnet2

We are looking for another boat right now as a move up from our 40 ft sailboat. I haven’t figured out if I am just being picky or if there isn’t that many for sale. Plus they are all way overpriced according to nadaguides.


15 posted on 04/29/2014 2:53:29 PM PDT by sheana
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To: SeekAndFind
A 19 year low...all part of Osama Obama’s plan.Make us all renters.Make us all employees.Make us all dependent on some government program.
16 posted on 04/29/2014 2:57:57 PM PDT by Gay State Conservative (Stalin Blamed The Kulaks,Obama Blames The Tea Party)
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To: Responsibility2nd

It’s not just the “hook up culture”. If you own a house, you’re tied to that area. Jobs except for some types in the public sector aren’t stable. People need to be able to relocate without much complication. Add to that, in a stagnant economy it’s questionable if dealing with those long-term repairs (plumbing, roofs etc) pays off financially.


17 posted on 04/29/2014 3:02:10 PM PDT by grania
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To: sheana

Very nice, but I’m talking about the younger generations coming up, who won’t be buying new boats or other higher end stuff...For the most part, they just won’t have the $$...

Look what happened to general aviation aircraft. Even the well off started giving them up decades ago....

So there ya go...


18 posted on 04/29/2014 3:05:40 PM PDT by dragnet2 (Diversion and evasion are tools of deceit)
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To: GRRRRR
HOUSE values are up up up too. Guy across the street sold for $375K with purchase price in 2006 at $260K. It was on the market for three days.

Same in TX. What used to be $50K rundown weekend cabins are being remodeled and put on the market for $750K plus. However, home ownership is going strong because these houses are being snatched up like candy and new subdivisions are going up everywhere. In our neighborhood, we and our neighbors are being taxed out of our homes.

19 posted on 04/29/2014 3:55:26 PM PDT by bgill
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To: SeekAndFind

And the Dear Leader has worked so hard for us. Ungrateful home buyers!


20 posted on 04/29/2014 3:57:48 PM PDT by St_Thomas_Aquinas ( Isaiah 22:22, Matthew 16:19, Revelation 3:7)
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To: rbg81

When you pay rent, you pay property taxes. So, when home values go up, property tax appraisals go up. Thus, rent goes up.


21 posted on 04/29/2014 4:41:33 PM PDT by VerySadAmerican
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To: bgill

My property taxes here in Houston increased about 8%. They’re still building in the last section of my neighborhood and they’re selling them faster than they’re building them. There are no “spec” homes. Most builders aren’t building “spec” homes. I personally think it’s because they know things are shaky.


22 posted on 04/29/2014 4:45:11 PM PDT by VerySadAmerican
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To: VerySadAmerican

Yeah...I get that. Which is why I made the post.


23 posted on 04/29/2014 4:45:24 PM PDT by rbg81
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To: VerySadAmerican

Mine have gone up the legal 10% the past 20 years (with the exception of that one year) plus a wee bit more with their fuzzy math which, of course, adds up over the years to significant increases. It does no good to protest because everyone’s taxes are being raised. By being taxed out of our homes, I’ve said many times on FR how ours have gone up from an amount equal to 2 weeks income to now 2 1/2 MONTHS takehome pay. Tell me there isn’t something seriously wrong with that. Because of the taxes, we can’t afford normal repairs and upkeep. Our next door neighbors bought to retire here. Sadly, they have had to put off retirement just to afford the taxes and are thinking it’s impossible so may have to sell. In the past couple years, literally every other house (with ours being the only exception) for a mile has on the market because of the taxes. Just last summer, two sets of our relatives who are well off wanted to retire here but after looking around decided to continue working and stay in Austin where it is... drum roll... cheaper.

I’m not seeing spec houses but figured that was due to Texas growing at such a rapid rate.


24 posted on 04/29/2014 5:49:16 PM PDT by bgill
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