A Troubling Story: “The US has Become a ‘Renter Nation'”

A Troubling Story: “The US has Become a ‘Renter Nation

A Troubling Story: “The US has Become a ‘Renter Nation'”

A troubling story is  playing out across they USA in the 10 years since the housing bubble peaked and burst in a horrific crash. As real estate has risen, homeowners are thriving and renters struggle.

For many longtime owners, times are good.

They are enjoying the benefits of growing equity and reduced mortgage payments from ultra-low interest rates.

But for America’s growing class of renters, rising costs, stagnant pay and rising home values have made it next to impossible to save enough to buy.

The possible consequences are grim, and painful for a nation already grappling with economic inequality. Whatever wealth most Americans possess mainly comes from home equity. An enlarged renter class means fewer Americans can build that same wealth and financial security.

Nearly 67% of adults still own homes.

Yet ownership has become a far off Dream for the many Americans who regard it as a route to prosperity and pride. The problem has become especially severe in areas that offer the best job prospects as well as those that have been battered by foreclosures.

An analysis of the census data covering over 300 US communities found that 2 major forces are driving a wedge between the fortunes of renters and homeowners:

Historically low mortgage rates have enabled homeowners to refinance and shrink their monthly payments, thereby reducing a major household cost. The median annual mortgage expense for a US homeowner has dropped by $1,492 since Y 2006.

A combination of foreclosures and new college graduates crowding into the strongest job markets has raised demand for rentals.

Renters accounted for all the 8-M+ net households the United States added in the past decade. Home ownership has dipped to 63.5%, near a 48-year low. That demand has driven up rents, which in turn have prevented or delayed renters from buying 1st homes.

The government says if you spend more than 30% of your pretax pay on housing, you are “cost-burdened.”

The total number of renters in that category has risen more than 30% in the past 10 years, to 21.2%. And 50% of all renters are now considered cost-burdened, compared with just 24% in Y 1960..

After the home bust, investors bought distressed houses in these communities at sharp discounts and rented them out. Many of the new tenants belong to Generation X households, ages 35 to 51 that began renting after the crash, according to the Harvard University Joint Center for Housing Studies.

The US census data analysis found a belt of stability across the Midwest where the housing boom and meltdown had little effect on home ownership. Rates of ownership remained relatively stable in Minneapolis, St. Louis and Kansas City, Missouri, where starter homes are comparatively affordable.

But the transformations have been very wide in other areas, particularly in smaller suburbs where much of the country lives.

Both before and during the housing boom, farmland around the country was bought cheaply and developed into houses, schools and shopping plazas, a build-out that ignited home ownership. Now many of those neighborhoods are occupied by renters living in homes whose former owners lost them to foreclosure.

 

Making that leap to home ownership is becoming harder for typical American renters.

The average 1st-time buyer makes $84,559, much more than the average household income of $75,037, that is the widest gap in over 15 years, according to an analysis by the online housing marketplace BildZoom

 

This closes one of the paths to accruing wealth.

On average, homeowners have a net housing wealth of $150,506, according to figures soon to be released by the Urban Institute Housing Instituet Policy Center.

That average climbs to $229,296 for those who own their homes free and clear, making the house an asset that provides a crucial financial cushion.

Just as the US economy failed 9 years ago, millennials began flooding the job market after college and graduate school.

The most educated tended to cluster in cities where jobs were plentiful, like Boston, San Francisco, and San Diego. They are renters paying historically high rents a result of too few apartments to meet demand and too few renters with enough savings to buy.

 

The opportunities are there for people who have money, or those who are already homeowners.

Americans refinanced $9.4-T of mortgage debt after the housing bubble burst, according to the Mortgage Bankers Association.

New mortgages at under 4% interest have freed up thousands of dollars annually for households in several metro areas, according to US Census figures.

 

What the housing recovery presented was a rare opportunity to capitalize on mortgage rates that had never dipped so low in a lifetime. But even while millions of renters struggle to save enough to buy, many such homeowners have never had it so good.

“They’re basically taking advantage of the changing economics of home ownership in ways that renters cannot,” said Andrew Jakabovics, senior director of policy and research at the affordable housing nonprofit  Enterprise Community Partners.

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

2 Responses to "A Troubling Story: “The US has Become a ‘Renter Nation'”"

  1. Victor Lang   June 22, 2016 at 3:05 pm

    If you like corruption, then the U.S. is the place to be. . One only needs to take a walk down to their local county courthouse to see the TRUTH. Foreclosures are at an all time high. Most state regulators do NOTHING to help homeowners by refusing to go after the banksters who CONTINUE to STEAL AND PILFER by perpetuating FRAUD on the courts and the people… The banks–one example: Ditech Financial…formerly Green Tree Financial (name change to cover up illegal practices and $60 million fine by CFPB)…hand in hand with Bank of America, or as they like to refer to themselves..FKA Countrywide..in cahoots with their slimy, underhanded Substitute Trustee attorneys (ie Samuel I White PC )..are submitting FORGERIES of owners signatures on mortgage notes, along with fake stamped TA-DA endorsements and are using these fabricated documents as evidence in courts across the country to steal homes in FRAUDULENT foreclosures. The forgeries are done through trace/digital means and the felonies and fraud upon the courts are happening in MASSIVE numbers as the judges, and state regulators turn a blind eye to the banksters who CONTINUE to steal and pilfer. Mail Fraud, forgery, racketeering, etc…..instead Bail outs and settlements are given to hide their crimes, loans that have been paid off over and over to the banks through the biggest ponzi scheme the world has seen., lies about modifications…AND not one gold collared bankster goes to prison…and instead…they CONTINUE to commit their crimes. The so called “judicial ” system cares not to do what it is supposed to do and merely denies justice and reaffirms most every case brought before it. Other states, such as Florida are not taking it any longer and are beginning to stop the crimes. ( Judge Butchko, a judge who ISN”T bought and paid for) IT’s truly a sad, demonic thing that is being perpetuated on homeowners and the sicko banksters who are running the beast system from behind their ugly curtain are …. pathetic. Massive fraud continues to take place and continues to be covered up). Anyone who believes the Wall Street bailout ended in 2008 is SADLY mistaken.

    • Paul Ebeling   June 26, 2016 at 1:52 am

      …And anyone that believes that the Bankers do not run the world is also SADLY mistaken. All the best, Paul

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