Since the housing collapse a few years ago, we have repeatedly been told that the housing market is recovering as the economy gets better. We’re regularly told that housing values will rise again and that homeowners are being protected with the Federal Reserve’s monetary policy. Is that really the case?
Again and again, news outlets, private think-tanks and governmental agencies have published reports that look at how the housing market isn’t really recovering and that there have been numerous setbacks. Financial experts, such as David Stockman, the former Reagan budget director, and Peter Schiff, president of Euro Pacific Capital, consistently aver that the United States economy and various sectors, including real estate, are again entering into a bubble fueled by Fed stimulus.
After reviewing plenty of reports, it can easily be surmised that talks of a booming housing market are nothing but delusional. Homeownership is falling, mortgage application rates are falling, mortgage rates are rising and the list goes on.
Here are 16 statistics to highlight how the housing market is not recovering and is in disarray:
1. Homes have become less affordable for potential buyers and there is a limited supply.
2. Builders started work at a seasonally-adjusted annual rate on 1.01 million homes in May, down 6.5 percent from 1.07 million from the previous month.
3. The National Association of Home Builders/Wells Fargo builder sentiment index for June showed U.S. homebuilders are not confident that the housing market is healthy.
4. Although housing starts have grown 9.4 percent over the past year, apartments accounted for most of those gains, which suggests more Americans are renting rather than owning.
5. Applications for building permits dropped 6.4 percent in May.
6. U.S. home price sales saw the smallest annual gain in 14 months this April.
7. The International Monetary Fund (IMF) recently warned in a report that the global housing market, particularly in the U.S., is overheating. “A recovery in the housing market is surely a welcome development, (but) we need to guard against another unsustainable boom,” said IMF deputy managing director, Min Zhu.
8. The homeownership rate in the U.S. declined to its lowest rate in nearly 20 years to 64.8 percent.
9. New-home sales have dipped 20 percent between the months January and March.
10. The 90-day delinquency rate on residential mortgages stands at approximately eight percent.
11. A report found that one in five mortgages is underwater, which means owners owe more than their homes are actually worth.
13. The same Freddie Mac report noted that only two in five housing markets are improving.
14. New and re-sale homes fell in the middle of the prime buying season (May to July).
15. The Federal Reserve and economists usually focus on consumer debt, but mortgage debt is a telling statistic. Right now, Americans owe $7.8 in outstanding mortgage debt and approximately $500 billion in home equity credit lines.
16. An estimated 157,000 individuals had a new foreclosure notation added to their credit reports between Oct. 1 and Dec. 31 last year.
Mortgage debt remains to be a considerable issue for the current and future generations. What’s just as dangerous is that more and more homeowners are taking out reverse mortgages just to cover their living expenses and pay down their debts. Real estate professionals say this will be the growing trend over the next decade and something to keep an eye on.
The collapse in the housing market has left a lot of people asking: is it even worth it to buy a home anymore? With enormous tax burdens, rising energy costs, eminent domain law abuses and the housing downturn, it’s no wonder why families are turning to the renting life.