Published on Nov 8, 2013 by VisionVictory
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What you are feeling right now is a modern day Depression. We will get through this, but like any major economic shock, the future is being altered dramatically due to the circumstances and actions by central planners today.
Fresh in the memories of Americans is a boom that lasted for nearly 30 years, from 1980 to 2008 with minimal interruptions.
Prosperity reigned on America, the credit bubble that started in the 1980’s helped fuel our economic expansion, coupled with bad monetary policy that gave rise to a tech and housing bubble. Not to discount the communications revolution and the largest generation spending more money than any generation in American history.
The Baby Boomers equal one third of Americas population, they dwarf both the generation before it and after it.
And according to research by Harry Dent, baby boomers peaked in home buying in 2005, coincidently homeownership peaked at 69.4% in 2004.
Today, homeownership is about 65% according to the U.S. Census, however this rate includes millions of people who are at least 90 days late on their mortgages. If we exclude these people, the homeownership rate drops to 62%, the lowest level in 50 years.
As to the future of everyone who is at least 90 days late, this is 1.4 million homeowners or “renters in waiting.”
The total number of properties as of August 2013 that are delinquent in the U.S. is 4.6 million
The housing bubble took people who couldn’t afford to buy homes and made them homeowners. Today, they are not only renters again, but they all have severely damaged credit scores which is important when buying a home.
The biggest driver for the rental boom though will be the Class of 2009, 10, 11, 12, and 2013, and for that matter, any graduate during the rest of this decade.
Young people drive rental markets and new home buyers, but today’s young people will not be buying homes.
Americas Youth, those 18-25 are going to college and loading up on student loans and consumer debt.
Upon graduating, only 43% of them are in careers for what they went to school for.
Those in the class of 2013 have a total debt, $35,200 according to a Fidelity Survey. This includes about $27,000 in government loans and $8,000 in other college related debt, including credit card, personal, state, and private loans.
These tenants will not be saving up to purchase their first home and will be chronic renters for a good majority of their lives.
With Obamacare now in place, many employers are reducing part time work hours to less than 30 per week; small businesses across the country with around 50 employees are decreasing their workforce to a maximum of 49 people to avoid penalties of the Affordable Care Act.
Not only do recent graduates have debt, but the jobs just aren’t there…
Unemployment for recent graduates is 7.9%, however this does not include those who have given up looking for a job or are working outside their degree. In general, for the younger generation, those between the ages of 18 to25, unemployment is at 16.1%.
For those that are employed, 53.6% aren’t working a job that requires a degree according to the Center for College Affordability and Productivity.
The top jobs for college graduates…
Food Service Employee
What will drive the Rental Boom:
Multiple factors will drive the rental boom
No money for a down payment
No Driver for Jobs
Bad Credit due to bankruptcy or foreclosure
Unqualified due to lack of income and high debt levels
This is NOT the coming rental boom, this boom is happening right now, and as you can see, the underlying fundamentals are very supportive.
Apartment Vacancy rates are down to 4.2% according to research by Reis Inc., prior to the housing bust, vacancy rates were above 8%.
For Single Family Homes, the median asking rent just hit an all-time high in July of 2013.
According the National Association of Realtors, 5 to 6 million families will become new renting households in the next 10 years.
Renter households have jumped from 38 million in 2008 to 42 million according to the U.S. Census Bureau
The best part about the rental boom, is that due to artificially low interest rates, we are seeing an anomaly. ***Rising rents while real wages are down***
Landlords are becoming more and more recession resistant by the day. With low vacancy rates, high demand, and effective rents increasing, now may be the best time to become a landlord.
The recovery we have seen in the stock market has not yielded any returns for the middle class in America.
1% of income earners took fully 93% of the income gains since the recovery
the top 10% of income earners account for 50% of all household income in the U.S.
The breadline in this depression has risen from 26 million in 2007 to 48 million people in 2013.