Best of the Week
Most Popular
1. 2019 From A Fourth Turning Perspective - James_Quinn
2.Beware the Young Stocks Bear Market! - Zeal_LLC
3.Safe Havens are Surging. What this Means for Stocks 2019 - Troy_Bombardia
4.Most Popular Financial Markets Analysis of 2018 - Trump and BrExit Chaos Dominate - Nadeem_Walayat
5.January 2019 Financial Markets Analysis and Forecasts - Nadeem_Walayat
6.Silver Price Trend Analysis 2019 - Nadeem_Walayat
7.Why 90% of Traders Lose - Nadeem_Walayat
8.What to do With Your Money in a Stocks Bear Market - Stephen_McBride
9.Stock Market What to Expect in the First 3~5 Months of 2019 - Chris_Vermeulen
10.China, Global Economy has Tipped over: The Surging Dollar and the Rallying Yen - FXCOT
Last 7 days
The Corporate Debt Bubble Is Strikingly Similar to the Subprime Mortgage Bubble - 18th Feb 19
Stacking The Next QE On Top Of A $4 Trillion Fed Floor - 18th Feb 19
Get ready for the Stock Market Breakout Pattern Setup II - 18th Feb 19
It's Blue Skies For The Stock Market As Far As The Eye Can See - 18th Feb 19
Stock Market Correction is Due - 18th Feb 19
Iran's Death Spiral -- 40 Years And Counting - 17 Feb 19
Venezuela's Opposition Is Playing With Fire - 17 Feb 19
Fed Chairman Deceives; Precious Metals Mine Supply Threatened - 17 Feb 19
After 8 Terrific Weeks for Stocks, What’s Next? - 16th Feb 19
My Favorite Real Estate Strategies: Rent to Live, Buy to Rent - 16th Feb 19
Schumer & Sanders Want One Thing: Your Money - 16th Feb 19
What Could Happen When the Stock Markets Correct Next - 16th Feb 19
Bitcoin Your Best Opportunity Outside of Stocks - 16th Feb 19
Olympus TG-5 Tough Camera Under SEA Water Test - 16th Feb 19
"Mi Amigo" Sheffield Bomber Crash Memorial Site Fly-past on 22nd February 2019 VR360 - 16th Feb 19
Plunging Inventories have Zinc Bulls Ready to Run - 15th Feb 19
Gold Stocks Mega Mergers Are Bad for Shareholders - 15th Feb 19
Retail Sales Crash! It’s 2008 All Over Again for Stock Market and Economy! - 15th Feb 19
Is Gold Market 2019 Like 2016? - 15th Feb 19
Virgin Media's Increasingly Unreliable Broadband Service - 15th Feb 19
2019 Starting to Shine But is it a Long Con for Stock Investors? - 15th Feb 19
Gold is on the Verge of a Bull-run and Here's Why - 15th Feb 19
Will Stock Market 2019 be like 1999? - 14th Feb 19
3 Charts That Scream “Don’t Buy Stocks” - 14th Feb 19
Capitalism Isn’t Bad, It’s Just Broken - 14th Feb 19
How To Find High-Yield Dividend Stocks That Are Safe - 14th Feb 19
Strategy Session - How This Stocks Bear Market Fits in With Markets of the Past - 14th Feb 19
Marijuana Stocks Ready for Another Massive Rally? - 14th Feb 19
Wage Day Advance And Why There is No Shame About It - 14th Feb 19
Will 2019 be the Year of the Big Breakout for Gold? - 13th Feb 19
Earth Overshoot Day Illustrates We are the Lemmings - 13th Feb 19
A Stock Market Rally With No Pullbacks. What’s Next for Stocks - 13th Feb 19
Where Is Gold’s Rally in Response to USD Weakness? - 13th Feb 19

Market Oracle FREE Newsletter

The Real Secret for Successful Trading

Where Have the Affordable Homes Gone?

Housing-Market / US Housing Oct 07, 2018 - 08:09 AM GMT

By: Harry_Dent

Housing-Market Bubbles are self-defeating. Their success is what eventually kills them.

The same is true for cycles.

Take the urbanization cycle for example…

As a population urbanizes, people get wealthier. But more affluent urbanites have fewer kids and that slows future demographic growth for the next generation.


Real estate is the latest bubble/cycle to prove this point…

At first, the faster home prices go up, the more people buy (usually with a mortgage). But at some point, fewer and fewer people can afford the prices that are outstripping economic growth and incomes.

And fewer people want to sell a winning hand, so there’s less inventory.

That’s exactly where we are today across the U.S.

And it’s worse in Canada and Australia (especially since they didn’t have a bubble burst in the great financial crisis). Their prices and consumer debt ratios are far higher than ours.

The situation has gotten so bad in Australia that Greg Owen of GOKO Management has asked me to come back to his country six months earlier than I normally would! Prices are cracking with increasing speed in what once seemed like a Teflon real estate market thanks to high Asian immigration and foreign speculation.

Here at home (in the U.S.), this chart shows that home sales are slowing, even though the economy is doing better after Trump’s tax cuts.

This is happening because there aren’t enough affordable homes available for sale!

Last time around, home sales peaked late 2005 into early 2006, long before stocks peaked and the economy slowed into recession. Back then, the catalyst was a combination of high prices and increasing defaults. This is currently the case in Australia, with one million out of nine million households in mortgage distress!

In the last year, U.S. homes have become 10% less affordable due to rising prices and higher mortgage rates.

They’ve become 40% less affordable since early 2009, despite the boom and lower rates the last few years.

And Who Buys Most of the Homes?

People age 27 to 43… and right now that’s the Millennial generation, which just so happens to be having the hardest time buying a home.

Check it out…



This chart shows that the home buying comfort index has fallen the most for the 18-to-34-year old group, which contains the prime starter home buyers (the peak is around age 31). Their index has dropped 33% from 158 to 122.

For the prime trade-up buyers in the 35 to 54 age group (with their peak at age 41), it has dropped 14%, from 160 to 138.

Unfortunately, the 55-plus age group doesn’t matter much (possibly the only time I could say this for the Baby Boomer generation), except for the smaller percentage of vacation homes. Even their home-buying comfort levels have dropped 10%, from 162 to 146.

Weakness in home sales is dragging down the most-bubbly economies – Hong Kong, China, Canada, Australia, the U.K., and to a lesser degree, the U.S.

This is another sign of a looming recession, which could turn into a depression this time around now that central banks have largely run out of ammunition in the fight to prevent the Depression of 2009!

Harry

http://economyandmarkets.com

Follow me on Twitter @HarryDentjr

Harry studied economics in college in the ’70s, but found it vague and inconclusive. He became so disillusioned by the state of the profession that he turned his back on it. Instead, he threw himself into the burgeoning New Science of Finance, which married economic research and market research and encompassed identifying and studying demographic trends, business cycles, consumers’ purchasing power and many, many other trends that empowered him to forecast economic and market changes.

Copyright © 2018 Harry Dent- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Harry Dent Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules