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Us: How Much Longer Can Our Unaffordable Housing Prices Last? (Spolier Alert: Not Much)

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http://www.peakprosperity.com/blog/94673/how-much-longer-can-our-unaffordable-housing-prices-last

Demographics & Housing Valuations

There are plenty of young people who'd like to buy a house and start a family (a.k.a. new household formation), but few have the job or income to buy a house at today's nosebleed levels -- a level just slightly less insane than the prices at the top of Housing Bubble #1:

chs-10-4-15-1.jpg

(Charts courtesy of Market Daily Briefing)

The current Housing Bubble #2 (also known as the Echo Bubble) certainly isn’t being driven by rising household income, as median household income has declined when adjusted for inflation:

chs-10-4-15-2.jpg

What enabled households to buy homes as prices pushed higher? Super-low mortgage rates:

chs-10-4-15-3.jpg

Now that mortgage rates have hit bottom, there’s not much room left to push housing valuations higher by lowering rates. No matter how solid the buyers’ credit rating, mortgages remain intrinsically risky, as unexpected medical emergencies, job losses, divorces, etc., trigger defaults in the best of times. In recessions, job losses typically cause defaults and lenders’ losses to rise.

All debt, including home mortgages, is based on household income and debt levels. The higher the debt load, the more money the household must devote to debt service. That leaves less to spend on additional debt or other spending.

Amazing how low rates have had to go to prop up the US housing market and they've been declining for years.

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http://www.peakprosperity.com/blog/94673/how-much-longer-can-our-unaffordable-housing-prices-last

Amazing how low rates have had to go to prop up the US housing market and they've been declining for years.

the greatest fraud in history.

when will the prosecutions begin?

Edited by TheCountOfNowhere

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chs-10-4-15-6.jpg

This is the real crime, how can any government, free market or not, allow another countries citizens to force the local population out of the security of a home in this way and allow them to leave them empty when each home is desperately needed? Evil.

Edited by JustAnotherProle

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the greatest fraud in history.

when will the prosecutions begin?

Aside from the odd 'barrow-boy' mortgage broker or low level banker they won't. The Elites are outside the sphere of 'The Rule of Law'.

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