The American Dream Dissipates at Record Pace
by Wolf Richter
WolfStreet.com
January 30, 2015
Let them buy toxic, rent-based, synthetic structured securities.
The housing market has been healed by the Fed’s bold actions, we’re told incessantly. We’re also told that the Fed is still keeping an eye on it because it might not be healed enough. Prices have soared over the last three years, and in some cities, like San Francisco, they have soared far beyond the prior crazy bubble peak. So we admit grudgingly that the Fed’s six-year money-printing and interest-rate-repression campaign, designed to inflate every asset price in sight even to absurdity, has worked.
However, an essential element in a healthy housing market – people who actually live in homes they own – has been dissipating. The homeownership rate peaked in 2004 at 69.2%. It was during the prior housing bubble. Speculative buying drove up prices beyond the reach of many potential buyers. But an industry that knew no scruples helped and lured folks into homes and mortgages they couldn’t afford and would never be able to pay for.
But as prices rose, even those methods were insufficient to keep the boom in homeownership going. And homeownership rates began declining in 2005. During the housing crash, the decline picked up speed, then meandered lower in a more leisurely pace. But now the trend has jumped off the cliff.
The Rest…HERE
