Home ownership hits lowest level since 1965, Morgan Stanley analysts ownership rate lower than Census Bureau statistics, Nation of renters, Obama core supporters millenials hit hardest with unemployment student loans and housing options
“For now, the absence of young adults from the housing market continues to put a dent in the homeownership rate, which dropped to 64.8% in the first quarter, compared with 65.2% in the fourth quarter of 2013, according to U.S. Census statistics. The rate was as high as 69.2% in the fourth quarter of 2004. For those younger than 35, the rate has fallen noticeably faster. It slipped to 36.2% in the first quarter, from 36.8% in the fourth. The homeownership rate for this group was as high as 43.6% in the second quarter of 2004.”…Market Watch May 12, 2014
“Nearly half of U.S. companies are reluctant to hire full-time employees because of the ACA. One in five firms indicates they are likely to hire fewer employees, and another one in 10 may lay off current employees in response to the law.
Other firms will shift toward part-time workers. More than 40 percent of CFOs say their companies will consider switching some jobs to less than 30 hours per week or targeting part-time workers for future employment.”…Duke University Fuqua School of Business December 11, 2013
“Freedom is the freedom to say that two plus two make four. If that is granted, all else follows.”…George Orwell, “1984″
Well, we told you so.
Once again one of Obama’s core support groups is getting clobbered by EconObama.
From CNN Money August 5, 2014.
“Home ownership hits lowest level since 1965”
“As the foreclosure crisis continues to wreak havoc on the housing market, a source of national pride has taken a sour turn. Home ownership is on the decline and, according to a recent Morgan Stanley report, the United States is fast becoming a nation of renters.
Last Friday, the Census Bureau reported that the percentage of people who owned a home had dropped to 65.9% during the second quarter — its lowest level since the first quarter of 1998 and a far cry from the high of 69.2% reached in late 2004.
Yet, in a research paper issued a week earlier, Morgan Stanley (MS, Fortune 500) analysts Oliver Chang, Vishwanath Tirupattur and James Egan argued that the home ownership rate is even lower than the Census Bureau statistics say.
In fact, once they factored in delinquent mortgage borrowers (the ones who are likely to lose their homes at some point), Morgan Stanley calculated that the home ownership rate is more like 59.2%.
That’s the lowest level since the Census Bureau started keeping quarterly records back in 1965 (before that, it recorded home ownership rates once a decade). The Census Bureau’s statistics, however, do not factor in mortgage delinquencies.”
“The dip in home ownership has done more than just line the pockets of landlords. It has also created a base of Americans with no home to rely on in times of financial need. Millions of owners can tap into their home’s equity in times of financial stress or to pay for cars, college tuition or other major expenses.
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Paying for a home is also a type of “forced savings,” said David Crowe, chief economist for the National Association of Home Builders. He explained that, after interest, mortgage payments go toward paying down the loan balance — and for homeowners who end up in the right type of loan the ending balance can be significant.
There are also less tangible benefits to home ownership. An increase in home ownership overall tends to improve community stability, according to “The Social Benefits of Homeownership and Stable Housing,” a report released last year by the National Association of Realtors (NAR).
In the paper, NAR cited several academic studies that found that children of homeowners have greater academic achievement than children of renters, that homeowners vote more and volunteer their participation in more community events than renters and that communities are better maintained and safer in neighborhoods with high ownership rates.”
From Citizen Wells May 13, 2014.
Citizen Wells recently presented the impact on blacks of the Obama economy.
Another demographic that supported Obama, young people, has also been devastated by the Obama economy and the subsequent impact on the housing market has affected everyone.
From Market Watch May 13, 2014.
“There was an 8% drop in existing home sales in Greensboro-High Point, N.C., after a 2% rise in the fourth quarter, RealtyTrac found. “There’s still a lot of uncertainty about the economy,” says Tommy Camp, president and CEO of Berkshire Hathaway HomeServices Yost & Little Realty. “Some buyers say, ‘We’ve got a job, but we don’t know how secure that is.’” A slowdown in household formation has also had a negative impact on the housing market, he says; 18- to 34-year-olds account for more than half of missing households — that is, Americans who would be owning or renting a home now if prerecession economic trends had continued.”
From Market Watch May 12, 2014.
“For now, the absence of young adults from the housing market continues to put a dent in the homeownership rate, which dropped to 64.8% in the first quarter, compared with 65.2% in the fourth quarter of 2013, according to U.S. Census statistics. The rate was as high as 69.2% in the fourth quarter of 2004. For those younger than 35, the rate has fallen noticeably faster. It slipped to 36.2% in the first quarter, from 36.8% in the fourth. The homeownership rate for this group was as high as 43.6% in the second quarter of 2004.
“The [25 to 35] age cohort…probably has had the hardest time recovering from the Great Recession,” said Rick Sharga, executive vice president of Auction.com, an online real estate marketplace. “For the time being, we’re likely to see a higher percentage of households formed being rental households,” and overall homeownership rates are likely to continue to drop somewhat—perhaps even down to 62%—before bottoming out and climbing back up, he added.
While some industry watchers have suggested a shift in attitudes away from Homeownership, Sharga and others say it’s too soon to know whether people truly have a waning interest in owning homes. But one thing’s for sure: Young people have plenty of hurdles to becoming homeowners.”
“The unemployment rate for 18-to-29-year-olds was 9.1% in April, which rises to 15.5% if you include those who have given up looking for work, according to Generation Opportunity, a national, nonpartisan youth advocacy organization. The unemployment rate was 6.3% in April for all ages.
Forget that without a job it’s just about impossible to get a mortgage. (It’s also hard to rent: Twenty-nine percent of adults younger than 35 live with their parents, according to Gallup poll results released earlier this year.) A slow start to earnings also means a slow start to saving.
“The majority of younger renters report having insufficient assets to cover a 5% down payment plus closing costs on a typical starter home,” Shahdad wrote.”
“In 2012, 1.3 million students who graduated from four-year colleges (or 71%) had student loan debt, up from 1.1 million in 2008 and 900,000 in 2004, according to the Institute for College Access & Success, a nonprofit independent research and policy organization. Graduating seniors with student loans had average debt levels of $29,400 in 2012, up 25% from $23,450 in 2008.
And new mortgage regulations, set into motion by the Dodd-Frank Act, require that borrowers have no more than a 43% debt-to-income ratio (with debt encompassing monthly housing costs and debt payments, including those on student loans). That ceiling may also restrict first-time buyers, some say.”