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If The American Dream Is To Own A Home, Then It Hasn’t Been In Worse Shape Since 1967

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Home House For Sale Mortgage MortgagesThanks to the “Obama recovery”, the rate of homeownership in the United States has fallen to the lowest level in 48 years.  The percentage of Americans that own a home is widely considered to be a key indicator of the health of the middle class, and we have just learned that during the second quarter of 2015 that number dropped from 63.7 percent to 63.4 percent.  It is now the lowest that it has been since 1967.  Unlike a lot of other government economic statistics, this one is fairly difficult to manipulate.  Either someone owns a home or they do not.  And what the homeownership rate is telling us is that the percentage of Americans that can qualify for a mortgage has been falling dramatically.  Just take a look at the following chart.  This is not just a decline – this is a complete and utter collapse…

Homeownership Rate 2015

Never before in U.S. history has the rate of homeownership fallen so far or so fast.

So what is the bottom line to all of this?

The bottom line is that the middle class is dying.

When I was growing up, I lived in a pretty typical middle class neighborhood and I went to a pretty typical high school.  I didn’t know anybody that was “rich”, but I didn’t know anybody that was poor either.  At that time, it seemed like just about anyone that was willing to work hard and be dependable could find a decent job.  Most families that I knew had a nice home and a couple of vehicles in the driveway.  Life was not perfect, but at least things felt “normal”.

But now things have changed.  The “American Dream” is becoming out of reach for an increasingly large number of people.  In fact, the percentage of Americans that do not believe that they will be able to buy a home “for the foreseeable future” just continues to soar.  The following comes from Zero Hedge

Three months ago, just as the last Census Homeownership and residential vacancy report hit, Gallup released its latest survey which confirmed just how dead the American Dream has become for tens if not hundreds of millions of Americans.

According to the poll, the number of Americans who did not currently own a home and say they do not think they will buy a home in “the foreseeable future,” had risen by one third to 41%, vs. “only” 31% two years ago. Non-homeowners’ expectations of buying a house in the next year or five years were unchanged, suggesting little change in the short-term housing market.

As Gallup wryly puts it, “what may have been a longer-term goal for many may now not be a goal at all, and this could have an effect on the longer-term housing market.”

Gallup Homeownership

Why are so many Americans unable to buy homes?

It is because of a lack of good jobs.

Since the year 2000, real median household income in the United States has declined by about 5000 dollars.  Good paying manufacturing jobs that once fueled the rise of the middle class are being shipped overseas, and they are being replaced by low paying service jobs.

This is the new “Obama economy”, and it is absolutely shredding the middle class.

Back in 2008, 53 percent of all Americans still considered themselves to be part of the “middle class”.

By 2014, that number had fallen to just 44 percent.

Since fewer and fewer of us can now afford a mortgage, more people than ever are being forced to rent, and this has helped push rents into the stratosphere.  Here is more from Zero Hedge

Because as homeownership falls, demand for rental housing is booming. The vacancy rate for rented homes in the U.S. fell to 6.8% in the first quarter from 7.5% a year earlier. It was the lowest first-quarter rate since 1986.

And the punchline, which should come as no surprise to anyone: the median monthly asking rent just rose to a record $803 across the US.

Unfortunately, as bad as these numbers are right now, they are about to get a whole lot worse.

As I have been warning about repeatedly, we stand on the very precipice of the next great financial crisis.  These are the last days of “normal life” in America, and we are about to enter a period of time which is going to be extraordinarily difficult and which is going to last for years.

So the truth is that this is not really a good time to be taking out a huge mortgage anyway.  During this next crisis, it will be very important to be “lean and mean”.  The less debt you have, the better off you will be.

If you do have a mortgage right now, that is okay.  Just be sure to build up an emergency fund so that you can make your mortgage payments if you lose your job or your business suffers a reversal.

Don’t forget what happened back in 2008.  When the stock market collapsed, millions of Americans started to lose their jobs, and because most of them were living paycheck to paycheck all of a sudden a whole lot of them could not make their mortgage payments.

We saw foreclosures surge like crazy, and millions of families that were once living comfortable middle class lifestyles very rapidly found themselves dumped out of their homes.

This is why I am constantly pounding away on the need for a sizable emergency fund.  During a crisis situation, the last thing that you are going to need is for someone to be trying to kick you out of your home.  Please make sure that you have a fund that can cover your rent or mortgage for at least six months.

If you are living paycheck to paycheck and you can barely afford the home that you are currently living in, there is no shame in selling your current place and moving to a more affordable location.  It is very, very tough for many people to downsize, but it could end up being a huge blessing in the end.

We are moving into a time in which conditions are going to be changing rapidly.

What worked in the past may not necessarily work in the future.

So be be flexible, be prayerful, and don’t be afraid to do what you think is best for you and your family.

  • JAY

    KING of the WORLD NARENDRA MODI will save us. thank you Michael for your service!

    • Jim Davis

      Since when is the Indian PM
      “king of the world”? More like king of a rat-infested, over-populated third world country.

  • G21

    If you’re a prepper, it may make sense to postpone buying more ammo and food, and to either buy silver/gold or stack some cash.
    All the ammo/food in the world won’t mean much if you and your family are out on the street.

    • MichaelfromTheEconomicCollapse

      There is definitely a balance, and sometimes finding that balance can be quite tricky.

  • Tim

    “So the truth is that this is not really a good time to be taking out a huge mortgage anyway. During this next crisis, it will be very important to be “lean and mean”. The less debt you have, the better off you will be.”

    That’s very wise advice, Michael.

    • MichaelfromTheEconomicCollapse

      Thank you Tim. :)

  • Rebecca

    Just make sure that your emergency fund is CASH and not in the bank!

    • iris

      Or better yet, something more tangible that can be traded. But yes, at least several thousand in cash if possible, is wise!

  • K

    Let me add a possible additional reason for declining home ownership. A lack of permanent jobs, that pay decent. I know of one person who can not land a permanent job. She seems to be able to get decent pay, but she constantly has to move where the work is. She does some kind of IT work. Usually the contracts run from six months to a year at a time. Add to this people that work in the oilpatch, or construction. And you have a new kind of nomad type worker. These are mostly single people, and having a house would just get in the way.

    • MichaelfromTheEconomicCollapse

      Very good point K. Banks are not prone to give out mortgages to people that work on a contract basis.

      Michael

    • iris

      To not be paying a mortgage right now, may be a blessing in disguise, if the vortex continues as it has been doing. In fact, a few years before the housing bubble burst, I read an article on a conservative news site, which recommended that if one didn’t already own a home, renting would be a safer move in the long run, as they saw that the stuff was about to hit the fan. One of our children and spouse were caught in the Freddy/Fannie thing, and got turned upside down in a home they couldn’t sell. They since have talked to a lawyer and are dealing with the situation wisely, by renting it out. They are now renting elsewhere, themselves, however, they have vowed never to to own a home again. Smart.

      • Jim Davis

        Thank you for that. Home “ownership” and mortgages are a slavery trap set by the banks.

        • iris

          I agree. We own our home outright now, but even so, if the day comes as has come for people in other parts of the world, we could have it seized, anyway, even though we pay our property taxes, etc. We can’t take it with us, though, and I’m looking forward to the “better inheritance”. Don’t want to be here one second longer than God does.

          • iris

            That was badly worded, I meant, one second longer than He wants me to stay on earth.

      • K

        Two things your child should watch out for, in the coming months. Any sign, such as late payments, that the person renting their house could be in financial trouble. The other is any sign their current landlord might be defaulting on the house they live in. For now renting might be better. But in a real downturn, it will not be without problems.

        • iris

          Thanks, K. And if that happens, only extremely rich people will be immune, as in, multi-millionaires. Of course, God can make ways where there are no ways, for the poorest among us.

    • whodowetrust

      Good point.

  • MIchael in Chicago

    There will be tens of thousands or hundreds of thousands of laid of energy workers between now and the end of the year. The retail sector will be on the chopping block next.

  • Evan Wise

    Owning a house is not the American Dream, it is merely an extension of it.. the dream was anyone either living here or immigrating here could provide a better life for themselves and their family through hard work and perseverance.. If you could manage that, then all the benefits, such as home-ownership, would soon follow.

    • Jim Davis

      Home “ownership” isn’t a benefit.

  • Zenithon

    I think part of the problem is that home ownership has been equated with taking out a ridiculously large loan on a house that is probably beyond your means and strapping yourself with payments for the next 30+ years.

    Home ownership should mean not having a mortgage and owning the house outright. It is possible to do, but you have to buy well below your means, take out a maximum of a 15 year loan and focus on getting it paid off as quickly as possible. That is home ownership.

    Think smaller, with a plan to actually own your home. The smaller home will also come with lower property taxes, lower utilities, lower furnishing costs, etc. Smaller less expensive homes are easier to unload should you find yourself in a situation where you have to sell.

    Once you have paid it off, you will discover a level of financial freedom that you will never want to live without again. Of course all of this is predicated on buying responsibly, when the time is right for you personally, i.e. having a good stable income and an idea that you will be in the area at least long enough to get it paid off.

    • Jim Davis

      If government would get out of the way, then interest rates would rise and home prices would fall enough so that people could realistically save enough cash to buy homes outright without any parasitic middlemen involved.

  • Mike Molyneaux

    For months sensational reports have been published in the
    independent alternative news, saying that the world is facing a global economic
    crisis and that financial disaster is only months away. Cynics say it’s
    all fear mongering – trying to get more people to buy gold or silver from them
    or their sponsors. I’m thinking the cynics could be right. Nothing wrong
    with owning gold or silver, but don’t get carried away with the hype. The world
    is already in economic crisis mode, even though governments won’t admit it, but the “crisis” is manufactured for a
    reason. There’s method in their madness.

  • Jim Davis

    What’s so great about “owning” a home? You never own it anyway with property taxes, HOAs and government. And it is a constant maintenance headache. The only reason real estate is considered an “investment’ is the constant propping up by the fed and the real estate lobbyists influence in our corrupt government.

    • whodowetrust

      It’s great in that if you own your home then YOU decide who is allowed to reside there and if you put money into things like a nice garden, it’s money in your pocket. It also prevents the “land owner” from deciding that you need to move (say if they decide to sell).Just a few reasons to own, not rent or lease.

      • joe schmo

        Stop paying your properly taxes and then see who really
        owns “your” home…hahaha

  • fatwillie

    How selfish to call it the american dream, just like that saying God bless america so selfish. How about God bless the world, and admitting that it is the dream of all or most men in most nations to have a home for his family, to be able to provide for such, and worry not about evil.

    • joe schmo

      Not selfish, just historically accurate. It may seem isolationist but from a historical perspective, America has represented a beacon of hope and opportunity for those wanting to emigrate away from the oppressive and/or economically depressed conditions prevalent within their own country. America is and has been a desireable place to live, work and raise a family compared to many other places around the world. That’s why it’s called the “American” dream. That may be changing, rapidly, but once upon a time it was something that you could’ve only realised as an American citizen..

    • Eddie Laidler

      Hey Globalist. The is nothing global today except the global siphoning of money by big banks. Do you see gays fighting for dead gays in other countries? Do you see China cutting carbon for Climate change? Do you see ? It was an American drem built from the sweat of workers brows. Sorry you didn’t get any ….or work for it or feel appreciative enough to support it. Instead of raising up we have whittled down to even the playing field.

  • DJohn1

    I have “owned” a house most of my life. I do not deal with landlords. But we all deal with parasites. Regardless. Everyone wants to dip their beak in the pie.
    Real Estate taxes are used by local government to support everything under the sun. Schools, libraries, local county agencies, etc. The trick was to always be in a market where housing was going up in price. Typically housing went up about 4.5% per year in an average community. Anyone “owning” a house also was putting something aside for their old age in the Mortgage Payment.
    Insurance on a house is mandatory if you have a Mortgage. So there you have what is wrong with the housing market today. Everyone wants a piece of you.
    Typically mortgages run 30-40 years in length.
    On a modest $40,000 mortgage you will pay back a bank something like about a $120,000 over the length of the loan. Starting at a ratio of 95% interest and 5% principal.
    The same loan on a car might be payed back in ten years.
    Now the good thing about a mortgage is it gives you tax deductions over the years. But you have to file a detailed return every year of the mortgage.
    If you rent out a place, another tax scheme gives you something called depreciation. That depreciation is deductable depending on the purchase date. Again, typically this can be a deductable based on the price of the property of 19-29 years or more.
    Landlords have been known to trade properties to start the deductable all over again.
    That is why you see wealthy people own rentals and management agencies to rent the property to proper financially stable clients.
    Does it work? Depends on the employment situation in your area. Because renters vent their frustration on the landlord in some cases causing 20-40 thousand dollars worth of damages.
    It does not do much good to sue someone for damages if they are bankrupt. And many are.
    Congress has changed the law on tax deductions over the years. They in their infinite wisdom think we shouldn’t be able to deduct expenses from buying a home. So they have taken at least a portion of the marketplace and destroyed it.
    Yet the foundation of all the derivatives and most of the banks is loaning money out to people at a good profit in the mortgage business.
    No one in congress seems to care that if you destroy the real estate revenue you also destroy the bank.
    And that is what has happened.
    Banks do not loan out their own money. Banks loan your money to you. For every account in the bank, they apply for and get matching government revenue to loan out to the customers.
    That is what makes it work. But the reverse is often true.
    In a foreclosed home situation, the bank insurance kicks in.
    If someone bought a house for $100,000 and have paid the loan down to $90,000 over say 5-7 years and they become unemployed then it is only a matter of time before they have to give up the house and rent from someone or go live with Mom and Pop at their house until they are gainfully employed.
    The bank has to get 2/3rds of the amount of the loan remaining in the foreclosure sale. So they would have to technically get 60,000 for a 90,000 remains on the loan. Typically folks put down 10,000 when they buy such a home. Where does that money come from?
    The title has to clear. So all Real Estate Taxes have to be paid.
    In a lot of states they have set up a program in which people pay the Real Estate Taxes on a foreclosed home and if it is not paid back in two years at 12% interest then they are issued a new title to the property and own it outright for the back taxes.
    So for 2,400 per year or 4,800 in taxes it is possible to own a house for the back taxes.
    Bear in mind the property at that point needs 30,000 dollars worth of repairs before anyone might live there.
    Some of my information here might be out of date. I haven’t practiced Real Estate with my Real Estate License since the mid 80s. Find an agent that specializes in this area to get any changes in local law out there.
    Many properties foreclosed are now sitting vacant in areas all over the country. Some have been vacant for at least 2 years.
    All of which is that former property owners are now unemployed and will likely remain so for the rest of their lives unless something happens to put them back to work.
    A lot of these people have seen the American Nightmare in action.
    All of which I blame on the Congress of this country. Mainly people that are well over the million dollar mark in income.
    If the crash occurs, it guarantees that Donald Trump will be your next President. Mainly because the alternatives are a lot less desirable than this Billionaire Real Estate developer. Mainly because the voting records of both parties are really bad. Mainly because the Christian Community has been fooled by them for way too many years. Right now the abortion issue could torpedo the entire Republican Party as they may have voted for abortion in the form of Planned Parenthood. Maybe . . .
    The democrat record is similarly bad and has caused the loss of jobs nationwide. But I think Michael needs to address this in an article about both parties.

    • iris

      Thanks, DJohn1, for the info. I agree with you about the GOP re: Planned Parenthood. Ive read from articles written by pro life doctors and lawyers that technically, the Partial Birth Abortion Ban didn’t really change anything, but in fact was a primer on how to perform one. With all of the rhetoric by the Bush administration of ending the “culture of death”, imo it was simply more of the shell game, smoke and mirrors, to keep us believing the lie that positive change would occur for the safety of the unborn. I think the GOP died a long time ago. Obama gets blamed for much, but in reality, he has merely been running the ball down the court which was handed off to him from a slower pace.

      • Gay Veteran

        you do understand that BOTH parties use social issues to keep us divided?

        • iris

          Yes, GV, that’s part of what I’ve been saying for months, hence my use of the word, Donkephants, the vast majority of them, anyway.

  • Mistanick

    There is an evil behind all this madness and those to promote the evil use as their game plan something called Agenda 21. You can read about it here:

    http://americanpolicy.org/agenda21/

    Years ago, when a few brave souls tried to raise awareness of the evils of Agenda 21, they were termed conspiracy theorists or some such titles. Today, Agenda has moved virtually into every state of the union, large towns and small. The mantra of the “wanna be” global governance promoters is something called “sustainability”. The term is used everywhere.

    Guess what? Private ownership of land is not considered to be “sustainable” nor are paved roads and suburban development in the way we like to see it. People are to be housed in dense urban developments, where they can be assessed, monitored, and controlled.

    People can do something about this. People need to put the pressure on local government so called leaders and congressional representatives to justify why things like single family housing is considered “unsustainable”. Nationally, the term of “smart housing” is woven into grant funds to lure developers to build the stack and pack housing of the future.

    We need to ask those who want to lead why they make the decisions they do? What is their understanding of Agenda 21. Why is stack and pack housing so “smart”. Why are grant monies geared to those communities willing to take the poison of Agenda 21 in its disguised forms. Regionalism seeks to control local towns and cities through non-elected regional government agencies that ham-string local decision making through regional controls. An example of this type of dastardly thinking is the One Bay Area Plan seeking to swallow the San Francisco Bay Area towns and cities with Agenda 21 practices. http://www.freedomadvocates.org/

    When asked tough questions, devotes of Agenda 21 will use fear as their moving force. “We must seek that which is sustainable to save the planet” or some such garbage.

    It is all about the money, control, and global governance used to play out greed, a desire to destroy the nation state, and freedom in the end.

    • GetReal4U2

      with the Pope cheering them on…get ready…September approaches quickly…

    • iris

      Yes, indeed. Thanks for bringing Agenda 21 up. All kinds of things are involved with it.

    • iris

      I checked out the link you sent. The article brings out a good quote about democracy. And the U.S.A. was never intended to be one. We’re a federated republic, or are supposed to be. Also liked the difference between inalienable and unalienable rights.

  • GetReal4U2

    everything is pointing towards September…get ready…

  • Shaquita Boom

    I get what your saying, but what is the purpose of saving money that will eventually be so devalued it will only be good for toilet paper or stoking a fire? We end up like old Germany or Mugabe’s Zimbabwe

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