Tuesday, April 24, 2012

A man's home is his noose

A strong case can be made that the fundamental supports of the housing market-- demographics, employment, creditworthiness and income--will not recover for a generation, Charles Hughes Smith writes.
 It can even be argued that housing has lost its status as the foundation of middle class wealth, not for a generation, but for the long term.
Blame it on the Baby Boom.
We can stipulate that the Baby Boom (65 million people) will be downsizing their housing, i.e. selling for the next two decades. We can also stipulate that most of the Baby Boom no longer has the wherewithal to buy second homes; rather, they will be dumping second homes to pay for living expenses as earnings, interest income and housing equity have all cratered since 2007. 
Not only are there not enough younger workers to buy all these millions of homes that will be put on the market, few of those younger workers have either the creditworthiness or income to buy a house unless the Federal government gives them essentially free money and a no-down payment entry. With the Federal deficit skyrocketing, that sort of giveaway won't last long.
You might want to close your eyes here.

Meantime, people are trapped where they are by the lousy housing market.
Nearly 60 percent of Americans would move from their communities right now if they could, according to a new survey by the YMCA. But with economic and other financial considerations preventing them from doing so, nearly two-thirds said they will become more involved in their community in the coming year in hopes of improving quality of life.
It's not pretty out there.

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