US Housing Contribution To GDP Lowest In Post War Era, Zillow report reveals negative equity permanent fixture, Supply hangover lackluster demand and reluctant lenders

HomeForSale

US Housing Contribution To GDP Lowest In Post War Era, Zillow report reveals negative equity permanent fixture, Supply hangover lackluster demand and reluctant lenders

 

From Zero Hedge March 27, 2015.

“Housing Contribution To US GDP Lowest In Post-War Era”

“In “Underwater Homeowners Here To Stay” we highlighted a report from Zillow which showed that negative equity has now become a permanent fixture of the US housing market. The report also showed that the percentage of homeowners who are underwater was flat from Q314 to Q414, breaking a string of 10 consecutive quarters of declines. We also recently noted that a completely ridiculous new home sales print that defied all logic notwithstanding, housing data, including starts and existing home sales, has come in below expectations. On a side note, home price appreciation has outpaced wage growth at a rate of 13:1, to which we would add:

Of course, the biggest determinant of home price appreciation over the past 2 years has nothing to do with US consumers, or household formation, as confirmed by the collapse in first-time homebuyers or the unprecedented depression in new mortgage origination, and everything to do with what we first suggested is one of the main drivers of the US housing bubble – foreigners parking their illegally procured cash in the US and evading taxes, now that US housing, with the NAR’s anti-money laundering exemption blessing, is the new normal’s Swiss Bank Account. That and flipping homes from one “all-cash” buyer to another “all-cash” buyer in hopes of a quick capital appreciation and the constant presence of the proverbial dumb money.

Against this backdrop, Deutsche Bank is out predicting that a sluggish US housing market is likely to impact the supply of MBS going forward. As DB notes, housing isn’t the GDP contributor it once was and not by a long shot. Not only that, but when it comes to recoveries, the housing market’s GDP contribution was 7 times below its post WW2 average in year one and has fared even worse since.”

“And demand isn’t looking so hot either:

Demand has likely played a part in slow housing, too, starting with owners that bought their homes in the last decade. Thanks to a 38% drop in home prices nationally from 2006 to 2012, according to Case-Shiller, a lot of those owners walked out the front door without any equity and without the ability to reenter the market as buyers. This has almost certainly contributed to the drop in rental unit vacancies from 10.6% in mid-2009 to 7.0% today. As for potential new owners, Americans, even before the crisis, started moving into their own place at a much slower pace than the long-term average of 1.2 million new households a year, that is, until recently. Demand from former and potential new owners has been soft.

Even in the best case scenario is which supply falls and demand rises, banks’ reluctance to lend could end up hobbling the market for the foreseeable future. ”

“So there is your housing recovery in a nutshell: supply hangover, lackluster demand, and reluctant lenders all coalescing in a housing market whose contribution to US economic growth is virtually nonexistent. “


Read more






Related News

  • Pennsylvania natural gas production second after Texas, 31k people in PA have jobs related to extracting natural gas, Almost double five years ago level
  • Retail earnings slump answer is simple, People do not have the money, Record numbers exit labor market, White American employment decimated, Record numbers on food stamps
  • Obama White House labor force participation lies explained, Covering for white American job losses, Another Obama diversion, Just over 1 million more white employments despite millions entering work force
  • Obama white house lies exceed orwellian levels, Monthly jobs reports, Labor force participation blamed on older workers retiring, Blame falls on Obama and lack of jobs for younger Americans
  • Obama white house council of economic advisers lies about labor force participation, Blame older workers, More younger workers not participating, White Americans decimated by Obama policies
  • NC jobs Obama vs Bush 6 year comparison, Labor force participation and percent of population employed plummet, Feb 2007 compared to Feb 2015
  • White americans fared better under Bush prior to Democrats and Obama control, Over 2 million more working in 2007 than 2015, Obama v Bush first 6 year comparison, Hispanic Latinos gain 4 million
  • March employment report reveals 106k less white employments, 226k fewer whites in labor force, 81k more Hispanics employed, More evidence white America being decimated by Obama and Fed policies
  • Leave a Reply

    Your email address will not be published. Required fields are marked as *

    *