Best of the Week
Most Popular
1. Ray Dalio: This Debt Cycle Will End Soon - John_Mauldin
2.Stock Market Dow Plunge Following Fake US - China Trade War Truce - Nadeem_Walayat
3.UK House Prices 2019 No Deal BrExit 30% Crash Warning! - Nadeem_Walayat
4.What the Oil Short-sellers and OPEC Don’t Know about Peak Shale - Andrew_Butter
5.Stock Market Crashed While the Yield Curve Inverted - Troy_Bombardia
6.More Late-cycle Signs for the Stock Market and What’s Next - Troy_Bombardia
7.US Economy Will Deteriorate Over Next Half Year. What this Means for Stocks - Troy_Bombardia
8.TICK TOCK, Counting Down to the Next Recession - James_Quinn
9.How Theresa May Put Britain on the Path Towards BrExit Civil War - Nadeem_Walayat
10.This Is the End of Trump’s Economic Sugar High - Patrick_Watson
Last 7 days
Where is the Dow Stock Market Santa Rally? - 17th Dec 18
With Weaker Climate Consensus, Expect Elevated Climate Change - 16th Dec 18
SMIGGLE Advent Calendar 2018 UK Contents - What You Get Look Inside Review - 16th Dec 18
Is there a Lump of Coal in Santa's Stock Market Bag? - 16th Dec 18
This Market Will Drive Gold in 2019… - 16th Dec 18
Gerald Celente:Central Banks Can’t Stop a 2019 Debt Disaster - 16th Dec 18
Gold Stocks Triple Breakout - 15th Dec 18
The stock market fails to rally each day. What’s next for stocks - 14th Dec 18
How Low Could the S&P 500 Go? - 14th Dec 18
An Industrial to Stock Trade: Is Boeing a BUY Here? - 14th Dec 18
Will the Arrest of Huawei Executive Derail Trade War Truce? - 14th Dec 18
Trump vs the Fed: Who Wins? - 13th Dec 18
Expect Gold & Silver to Pullback Before the Next Move Higher - 13th Dec 18
Dollar Index Trends, USDJPY Setting Up - 13th Dec 18
While The Stocks Bulls Fiddle With The 'Fundamentals,' Rome Burns - 13th Dec 18
The Historic Role of Silver - 13th Dec 18
Natural Gas Price Setup for a Big Move Lower - 13th Dec 18
How to Get 20% Off Morrisons Weekly Supermarket Shopping - 13th Dec 18
Gold Price Analysis: Closer To A Significant Monetary Event - 13th Dec 18
Where is the Stock Market Santa Claus Rally? - 12th Dec 18
Politics and Economics in Times of Crisis - 12th Dec 18
Owning Precious Metals in an IRA - 12th Dec 18
Ways to Improve the Value of Your Home - 12th Dec 18
Theresa May No Confidence Vote, Next Tory Leader Betting Market Analysis and Forecasts - 12th Dec 18
Gold & Global Financial Crisis Redux - 12th Dec 18
Wow Your Neighbours With the Best Christmas Projector Lights for Holidays 2018! - 12th Dec 18
Stock Market Topping Formation as Risks Rise Around the World - 11th Dec 18
The Amazing Story of Gold to Gold Stocks Ratios - 11th Dec 18
Stock Market Medium term Bullish, But Long Term Risk:Reward is Bearish - 11th Dec 18
Is a Deleveraging Event about to Unfold in the Stock Market? - 11th Dec 18
Making Money through Property Investment - 11th Dec 18
Brexit: What Will it Mean for Exchange Rates? - 11th Dec 18
United States Facing Climate Change Severe Water Stress - 10th Dec 18
Waiting for Gold Price to Erupt - 10th Dec 18
Stock Market Key Support Being Re-Tested - 10th Dec 18
May BrExit Deal Tory MP Votes Forecast, Betting Market Analysis - 10th Dec 18
Listen to What Gold is Telling You - 10th Dec 18
The Stock Market’s Long Term Outlook is Changing - 10th Dec 18
Palladium Shortages Expose Broken Futures Markets for Precious Metals - 9th Dec 18
Is an Inverted Yield Curve Bullish for Gold? - 9th Dec 18

Market Oracle FREE Newsletter

How You Could Make £2,850 Per Month

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

© 2005-2018 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