WSJ: Lopsided Housing Rebound Leaves Millions of People Out in the Cold

It's good if you already got it; otherwise, not so promising if you got stuck during the Great Recession.   That appears to be the case with home ownership.

The Haves and the Have Nots appear to be a permanent condition in our society.  The underperformance of the economy for the broad middle class has done long term damage to millions of Americans.  Recent news about home ownership confirms this damage.

Something is deeply wrong in America.   Working class Americans struggle and few seem to notice in Washington D.C., the east and left coasts, and most of the media. 

But, the low interest rate environment is a good thing for people who can afford to buy a new home, or sell their existing home.   Low interest rates have benefitted the billionaires, high wage earners, and corporations.   Good for them.

However, has the train left with a quarter of the cars in the back detached and stuck at the station?  It looks like it.  If you are still attached to the train, the ride seems great.  Those stuck hearing a fading clickety clack have a different understanding and feeling.  The overall feeling is isolation.  PB


The following excerpt is from today's Wall Street Journal.  
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From www.WSJ.com:

The housing recovery that began in 2012 has lifted the overall market but left behind a broad swath of the middle class, threatening to create a generation of permanent renters and sowing economic anxiety and frustration for millions of Americans.

...Overall prices are now just 2% below the peak reached in July 2006, according to S&P CoreLogic Case-Shiller Indices.

But most of the price gains, economists said, stem from a lack of fresh supply rather than a surge of buyers.

The pace of new home construction remains at levels typically associated with recessions, while the homeownership rate in the second quarter was at its lowest point since the Census Bureau began tracking quarterly data in 1965 and the share of first-time home purchases remains mired near three-decade lows.

The lopsided recovery has shut out millions of aspiring homeowners who have been forced to rent because of damaged credit, swelling student loans, tough credit standards and a dearth of affordable homes, economists said.

In all, some 200,000 to 300,000 fewer U.S. households are purchasing a new home each year than would during normal market conditions, estimates Ken Rosen, chairman of the Fisher Center of Real Estate and Urban Economics at the University of California at Berkeley...

Anxiety about missed economic opportunities is a key driver of the anti-incumbent anger on both sides of the political spectrum that has shaken up the 2016 election season, helping fuel the insurgent presidential campaigns of Donald Trump and Bernie Sanders.

“You have these people who can’t get housing, and it’s turning into this rage,” said Kevin Finkel, executive vice president at Philadelphia-based Resource Real Estate, which owns or manages 25,550 apartments around the U.S.

After peaking in July 2006, the Case-Shiller index plunged 27% over the next six years...

While economists expected the homeownership rate to begin edging up this year, the rate fell to a 51-year low of 62.9% in the second quarter from 63.4% in the same quarter last year.

The rate could fall to 58% or lower by 2050, according to a recent prediction by housing experts Arthur Acolin of the University of Southern California, Laurie Goodman of the Urban Institute and Susan Wachter of the Wharton School at the University of Pennsylvania.

The main reason, they say: mortgage availability.

Lenders chastened by the financial crisis have been fearful of making loans to borrowers with dings on their credit, student debt or credit-card bills, or younger buyers with shorter credit histories.

“I’m not sure that we’ll see some of those conditions change in any material way in the foreseeable future,” said Tim Mayopoulos, the president and chief executive officer of mortgage giant Fannie Mae, in an interview last week.

“Right now our mortgage finance system is still not working well for lower- and middle-income households and first-time buyers,” added Mr. Rosen.

A dearth of home construction, especially at the lower end, is taking a toll.

Nationally, the inventory of homes for sale has dropped more than 37% since 2011, according to Zillow, a real estate information firm. Some of that reflects the clearing away of distressed inventory, but economists said the pendulum has swung toward a housing shortage.

An estimated 1 million new households were formed last year, but only 620,000 new housing units were built, according to the Urban Institute.

An analysis of census data by the Urban Institute showed that all of the net new households formed between 2006 and 2014 were renters rather than owners...
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Link: http://www.wsj.com/articles/lopsided-housing-rebound-leaves-millions-of-people-out-in-the-cold-1470852996