In “America’s Housing Problem: Buying And Renting Are Both Unaffordable,” we documented the rather disconcerting situation facing America’s renters.
Despite the fact that Fannie Mae and Freddie Mac now back home loans with down payments as low as 3% (down from a previous floor of 5%) and despite the fact that the FHFA’s move to lower the down payment requirement effectively forced FHA to cut premiums in order to stay competitive, presumably making housing even more ‘affordable’, the homeownership dream is quickly slipping away for many Americans.
In short, non-existent wage growth (remember, wage growth in America is now almost solely concentrated in the hands of what the BLS describes as ‘supervisory’ workers who make up less than a fifth of the labor force) and crushing student debt (the Class of 2015 graduated with an average debt load of $35,000) are conspiring with the BEA’s fabricated, double-adjusted “recovery” to make saving enough for a down payment virtually impossible.
Meanwhile, the very fact that many Americans are shut out of homeownership means more demand for rentals which in turn drives up rents, squeezing household balance sheets further and effectively leaving many stuck between homes they can’t buy and rents they can’t afford. The result: the homeownership rate in America is now back to where it was 20 years ago and some Americans face the very real possibility of not having a place to live at all.
Now, the question is whether the homeownership rates that persisted in the years leading up to the crisis were realistic in the first place or simply represented what happens when a political mandate (promote the “American Dream”) meets the Wall Street securitization machine.
Whatever the case, renewed scrutiny on the demise of the American homeowner comes at a rather inconvenient time because, as WSJ