doctorhousingbubble.com / Dr. Housing Bubble / August 4th, 2014
The low turnover in housing is having some organizations changing their tune regarding the current boom in home values. After all, places like the National Association of Realtors (NAR) will be better off with higher sales volume and lower prices versus very low sales volume and higher prices. As we see investors pulling back, the already low volume is dropping even further in what is typically the house lustful months of the summer. In virtually any three month period over the last 60+ years you would typically see the number of homeowners far outpace the growth in renter households. That trend has reversed since the housing bubble popped. For example, over the last 3 months the number of renting households went up by 312,000 while the number of homeowners went up by 54,000. The trend to becoming a renter nation continues. The NAR actually is echoing a similar tune to what we are seeing and that is many young households are income strapped and many are living at home and will first go out and rent before buying a home. So this trend is likely to continue. Rents are heavily dependent on local incomes and jobs. We’ve had a solid run since 2009 in regards to the stock market and things are looking a little bit frothy at this point if we look at price-to-earnings ratios and also overall sentiment. So what changes when we add over 7 million renter households over the last decade?
Renting nation
There is a major push to becoming a renter nation mostly by economic forces. Since 2008 the strongest and most consistent group of buyers has come in the form of investors. Keep in mind that these buyers were going after lower priced foreclosure re-sales. These are not your “mom flippers” now paying high price-tags to squeeze a few bucks out of a flip. Many investors were outbidding regular households looking for deals. Many had access to auction sales that regular buyers never even had a chance at contending with unless they had the liquid cash available. And of course, those millions of households that lived through a foreclosure now need a place to live. Many have opted to rent.
The trend is rather dramatic when we look at the raw numbers of homeowners and renters over the last decade:
The post Adding 7+ million renter households over the last decade: Number of homeowners neutral over last 10 years. The shifting purchasing power of American households. appeared first on Silver For The People.
