The Phaserl


Get used to an America where owning a home is not part of the dream


Well congratulations America.  Signs of another housing bubble are as clear as day.  Loans with nothing down are back in the market.  Incomes are stagnant so creative financing is necessary to buy more expensive homes.  And homes are more expensive.  The current home price data shows that across the country we have now surpassed the last bubble peak.  Yet incomes are not keeping up with wild movements in prices.  The end result is that the homeownership rate has collapsed yet somehow home prices went up.  How can prices go up with fewer families buying homes?  Easy, since the bailout funds allowed banks, hedge funds, and investors to pickup foreclosed homes from families and then turned them into rentals.  Now we have many more people living in rental homes accumulating no equity and barely scraping by.  Yet somehow with housing prices soaring, college tuition at crazy levels, and stagnant incomes we are led to believe that somehow we have no inflation.  The current model of the American Dream involves no homeownership for the already shrinking middle class.

Housing prices hit new peak

First, it is worth noting that housing prices have now reached an all-time peak.  This is worth noting because the last peak was clearly at a point where we were massively overpriced and the entire world economy came close to Great Depression II:

housing price

Source: St. Louis Fed

This is great news right?  Well not if household income is stagnant.  We have clear evidence that this wasn’t driven by families hungry to buy homes.  Just look at the homeownership rate:

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