Doctor Housing Bubble 09/21/13

[Crewleader]

Landlord nation: Since 2007 the US has added over 2,000,000 renter households while losing 750,000 owner households. Rents rising in spite of falling incomes.

After scouring the newly released Census data many things stood out but one of them continues to reflect a growing disconnect in housing. The US is adding many more renter households. This of course is occurring in spite of record rising home prices. For regular buyers, the mortgage market is still checking carefully for income and other requirements yet “cash buyers” continue to be the dominant force in 2013. In expensive areas like California, more people are using jumbo loans. Ironically, the market has now adjusted once again to the Fed’s obtuse language on tapering. While this language might come off difficult to decipher, the stats are very clear. Over the last six years we have added millions of households as renters. What are the longer term implications of this?


Renters versus owners

I went ahead and pulled data from a few key years and the latest 2012 annual Census data:

rent vs owner changes census

http://www.doctorhousingbubble.com/landlord-nation-increase-renter-renting-households-us-rising-rents/#more-6869

[jtuck004]

1. > What are the longer term implications of this? < One is it makes the workforce

more portable and disposable, and two, I suspect, makes people much less likely to vote, or to get involved in their community, almost certainly at the local level, and perhaps at the national level as well.

[SheilaT]

2. Sometimes it makes sense to rent.

Sometimes it makes sense to buy.

I've just turned 65, and a number of people my age have been telling me that they are planning to relocate soon, generally to be nearer to adult children, and will rent, never again want to own. Me, I bought my current place four years ago, and I expect to relocate at some point down the road, again to be nearer to adult children. I will only consider buying in some sort of condo type setup as I don't want to be totally responsible for maintenance and yard work. So I may well rent.

[Warpy]

4. There are two reasons to buy

One, as a hedge against rising rents. That's why I bought this dump 18 years ago. It worked, rents caught up within 2 years. It's paid off and is still cheap housing. The area of town sucks but the neighbors are all good people.

Two, if you're rock stable with your own business and no plan to leave the area and you buy in time to have it paid off by or shortly after retirement.

The market is just too crazy right now to do the "I'll be here for three years, might as well buy" to work. That only worked in a steadily inflating sales market. Nomads are much better off renting and saving everything they can without worrying about putting on a new roof or installing a new furnace.

[Warpy]

3. The doctor and I were on the same page in late 2005

My dad was dying and I was looking at all the "For Sale" signs in his neighborhood in Florida and realizing the party was over. Doc HB was seeing a lot of insanity on the left coast, coming to the same conclusion.

Other people except those here on the Economy board thought we were both nuts. We weren't.

I've greatly enjoyed his page since then.

[NMDemDist2]

5. yup, thanks to this forum I got out of Phoenix just in time

and found an affordable home in NM