THE HOUSING MARKET IS A GOOD EXAMPLE OF THE
IMPACT OF DECLINING PURCHASING POWER IN THE U.S.
2.6 years of rental then—6 years to afford to buy now—and houses are 60 percent more expensive in real terms. This is a fairly drastic change for the worse of a rather important sector of the economy.
We should be worried about this sort of thing. It reflects a significant deterioration in the quality of our economic lives. It is just one example.
I am ever amazed at the apparent lack of awareness and concern about America’s economic decline. It seems to me that the evidence to support that viewpoint is crystal clear.
On the other hand, the economic profession as a whole don’t seem to be remotely alarmed, the politicians don’t want to talk about it (even if they know) and perhaps the U.S. public, as a whole, is too distracted, deluded, legally drugged, and otherwise preoccupied. Smartphones may turn out to have a lot to answer for!
Also debt is helping to disguise the impact. It is soaring just like before the 2007 Great Recession. Déjà vu all over again!
The evidence that all is not well keeps piling up.
The following piece by Beth Braverman is from THE FISCAL TIMES
Today’s first-time homebuyer rents for an average of six years before buying his or her first home, according to a new analysis by Zillow. Time spent renting has been marching mostly upward since the 1970s, when first-time buyers rented for just 2.6 years before purchasing a home.
Today’s first-time buyers are also more likely to be single and older (with an average age of 32.5) than previous generations.
“Millennials are delaying all kinds of major life decisions, like getting married and having kids, so it makes sense that they would also delay buying a home,” Zillow Chief Economist Svenja Gudell said in a statement.
Part of the reason for that delay could be that homes cost much more than they did decades ago.
Today’s homebuyer makes roughly the same amount of money in inflation-adjusted terms as a buyer in the 1970s, but the homes that they’re purchasing are about 60 percent more expensive.
There are other roadblocks for first-timers. Limited inventory and strong competition make the home buying process difficult for property virgins and student debt can make it tougher to get a mortgage.
Those six years spent renting aren’t coming cheap, either. In 2013, almost half of all renters were spending more than 30 percent of their income on housing, with more than a quarter sending half their income to their landlord every month, according to the “State of the Nation’s Housing 2015” report issued in June by the Harvard Joint Center for Housing Studies. That makes it pretty tough to save for a down payment