By William Hudson
The number of Americans that own a home has fallen to its lowest recorded level ever. The second quarter of 2016, reflected that the non-seasonally adjusted homeownership rate fell to 62.9 percent, the same percentage reflected when the U.S. Census began tracking homeownership rates back in 1965.
Since the recession, and through the Obama presidency, the percentage of Americans that own a home has decreased significantly. The American middle class is now a minority- for the first time ever. Homeownership and consumer demand are driven by the middle-class purchaser who holds a middle class job. The United States economy is suffering from income stagnation, flat wages, and inflated consumer and home prices. The average median household income of only $51,939 only goes so far after half of that income goes to some type of tax.
An after tax salary of 30k doesn’t buy much, and forget any life quality perks. Food, energy, transportation and medical care can exhaust an income of 30k in no time flat. If this is the federal government’s idea of a recovery- the middle and lower classes are doomed.
This isn’t about how home-ownership rates are decreasing while rents increase- this is about the fact that home ownership rates are at their lowest levels ever seen. Home-ownership is central to pride of ownership, stable neighborhoods, and low turnover rates. As neighborhoods transition from family ownership to landlords with rentals, there is typically a depreciation in house value, an increase in turnover, and less stability. The quality of education then falls, crime rates increase and once well-maintained houses lose their value and typically incur deferred maintenance. Although this is not always true, the statistics support this scenario.
Home ownership once represented that you had attained a certain level of achievement and were a member of the middle class. Home-ownership rates rose over the past decade to their highest level ever, and now we are seeing a continuous decrease in home ownership every month. During the gilded housing boom of the mid-2000s, approximately 69.2 percent of Americans owned homes.
Home-ownership rates are falling because:
• Home prices have inflated while wages have stagnated (for the lower 80%) making entry level homes too expensive for the majority of lower and middle class Americans.
• Affordable homes in suburban areas require lengthy and expensive commute every day.
• First time buyers have difficulty saving for a down payment since they are burdened by soaring rents and no money left over at month’s end.
• Millennials witnessed the American Dream become the American Nightmare, and have been taught they are tenants in their own homes and their vulnerability when dealing with predatory servicers.
• Low interest rates have created a housing bubble where home prices have inflated beyond their free-market value and monthly payments have soared.
• Higher home prices result in higher taxes, commissions, and insurance.
• Past homeowners who have had a bad experience with a mortgage servicer will likely NEVER purchase a home again from a large lender. Once bitten twice shy.
However, there is more to this story. The life quality of the middle class has been eroding for decades. For example:
• Unemployment impacts one of every five families, where no one in the family works.
• 102 million working-age Americans are unemployed.
• The Social Security Administration reports that 51 percent of American workers currently make less than $30,000 a year.
• In 1970, the middle class brought home approximately 62 percent of all income. Today, that number is 43 percent.
• The Federal Reserve says that 47 percent of Americans could not pay an unexpected $400 emergency room bill without borrowing the money from somewhere or selling something.
• A recent survey discovered that 62 percent of all Americans possess less than $1,000 in savings.
• If you have no debt and ten dollars, you have a GREATER net worth than about 25% of all Americans.
• Today one out of five children is on food stamps. In 2007 that number was one in eight children.
The middle class in America is dying while our politicians continue to get wealthier while no changes are made. America was once the most innovative, free and thriving economy in the history of mankind. The economists that are realists believe that the 20+ trillion dollars of debt coupled with 100 million unemployed Americans spells disaster.
The 50 million Americans who live in poverty and receive food stamps can’t afford a further decrease in the buying power of the US dollar. Yet, the media and your government officials swear up and down that things are just fine. They report the job market is rebounding, wages are rising and the markets are at peak levels.
Nothing could be further than the truth. Obama is the FIRST PRESIDENT EVER to not see a single year of 3% GDP growth.
Filed under: foreclosure