Category Archives: Housing

Rental Insecurity: Survey Finds 1 in 5 American Renters Missed a Payment in Past 3 Months

A new survey conducted by ApartmentList.com recently found that Americans, despite historically low unemployment levels and surging stock indices which would both seem to suggest that ‘everything is awesome’, are having a very difficult time making ends meet.  Per the survey, some 20% of renters admit they were unable to make their monthly payments on time at least once over the preceding three months with the results being even worse among minorities and those lacking a college degree.

 
 
  • Analyzing data from Apartment List users, we find that nearly one in five renters were unable to pay their rent in full for at least one of the past three months. We estimate that 3.7 million American renters have experienced an eviction.
  • Evictions disproportionately impact the most vulnerable members of our society. Renters without a college education are more than twice as likely to face eviction as those with a four-year degree.
  • Additionally, we find that black households face the highest rates of eviction, even when controlling for education and income. Perhaps most troublingly, households with children are twice as likely to face an eviction threat, regardless of marital status.
  • The impacts of eviction are severe and long-lasting. Evictions are a leading cause of homelessness, and research has tied eviction to poor health outcomes in both adults and children. These effects are persistent, and experiencing an eviction makes it difficult to get back on one’s feet.
  • Performing a metro-level analysis, we find that evictions are most common in metros hit hard by the foreclosure crisis and in those experiencing high rates of poverty. Perhaps counterintuitively, expensive coastal metros have comparatively low rates of eviction, in part because strong job markets with high median wages offset expensive rents in those areas.

As ApartmentList notes, some 3.7 million Americans, of roughly 118 million total renters, have experienced an eviction at some point in their life.  Meanwhile, “rent insecurity” is even more prevalent with nearly 30% of folks making less than $30,000 per year saying they have difficultly making monthly rent payments.

3.7 million Americans have experienced eviction, with rental insecurity affecting nearly one in five.

Our Apartment List estimates show that 3.3 percent of renters have experienced an eviction at some point in the past, and 2.4 percent were evicted from their most recent residence. With an estimated 118 million renters in the U.S. today, we estimate that 3.7 million Americans have been affected by eviction at some point. If we assume that some share respondents fail to report informal evictions, this estimate is most likely understated.

While experiencing eviction is a worst-case scenario with dire effects, a much larger share of renters still struggle with some form of rental insecurity. Our analysis shows that 18 percent of respondents had difficulty paying all or part of their rent within the past three months. The issue is particularly acute for low-income renters, 27.5 percent of whom were recently unable to pay their full rent.

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Renters with just a high school diploma are more than three times as likely to have faced an eviction threat in the past year than those with a Bachelor’s degree.

Of those who did not attend college, 4.1 percent cited an eviction as the reason for their last move, compared to just 1.9 percent of those with at least some college education. This trend points to a broader issue of the housing market leaving behind less educated Americans. A recent Apartment List study showed that the gap in homeownership rates between high school and college graduates widened from 1.6 percent in 1980 to 14.9 percent in 2015.

A similar trend holds when broken down by income. Of those earning less than $30,000 per year, 11 percent faced an eviction threat in the past year, and 3.4 percent were evicted from their previous residence. In contrast, for those earning more than $60,000 per year, these figures are 3.1 percent and 1.5 percent, respectively.

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Meanwhile, households with children were found to be twice as likely to face an eviction threat, regardless of marital status.

Single parent households are at the highest risk, with 30.1 percent reporting difficulty paying rent within the past three months. However, married couples with children do not fare much better, with 27.2 percent struggling to pay rent. For those without children, the rates are 14.7 percent for single respondents and 13.3 percent of married respondents. Our findings are consistent with previous research showing that, among tenants who appear in eviction court, those with children are significantly more likely to be evicted.

This result points to the fact the child care represents an essential but often overwhelming expense for many families, even those with both parents in the house. Analysis from Care.com shows that average daycare costs for toddlers range from $8,043 to $18,815 per year. Furthermore, one-third of families surveyed reported that childcare costs take up 20 percent or more of their household income.

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Not surprisingly, evictions were found to be most prevalent in metro areas where poverty rates are the highest.  

Of the 50 largest metros in the nation, evictions are most prevalent in Memphis, with 6.1 percent of users reporting a prior eviction. Most of the metros with the highest eviction rates are located in the South and Midwest and include Atlanta, Indianapolis and Dallas. We find that the factors most strongly correlated with eviction rates include (1) the rate of foreclosures from 2007 to 2008, during the height of the foreclosure crisis, and (2) current poverty rates.

Memphis, for example, has the highest share of its population living in poverty at 19.4 percent, and it also has the highest eviction rate. In metros with high poverty rates, many households may qualify for assistance through programs such as Section 8, but, unfortunately, only a small share of those eligible for such benefits actually receive them, leaving the majority of low-income households struggling to pay rent.

Las Vegas had the second highest foreclosure rate from 2007 to 2008 at 9.2 percent and now has the sixth-highest eviction rate at 5.5 percent. This correlation suggests that many of the areas hit hardest by the foreclosure crisis have had a difficult time recovering. Despite lower housing costs, renters in these areas — some of whom are likely former owners who had their homes foreclosed upon — face a lack of opportunity that makes it difficult for them to pay their rent.

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Of course, with rental rates steadily climbing since the great recession, in spite of stagnant wages, it’s hardly surprising that the Federal Reserve Bank’s controlled “recovery” hasn’t helped all Americans equally.

Source: ZeroHedge

 

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This $1.1 Million Silicon Valley Shack Is A Steal, But There’s A Bizarre Catch

The owner of one tiny, unassuming cottage in Mountain View, California just sold his house for well below the asking price of $1.6 million – but asked the new buyers to agree to one highly unusual condition: They must allow him to continue living there, rent free, for seven years, NBC News reported.

The Silicon Valley property went for $1.1 million after being on the market for only a few weeks, which is surprising, considering the house – little more than a shotgun shack – hardly has room for multiple tenants.

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The property’s realtor said the home’s elderly former owner will continue living in the home for seven more years ‘rent back at no charge.’

Realtor Joban Brown said that while the price is not unusual for the hot spot location, the former owner’s request to continue living at the property is ‘not a typical situation.’

Erika Enos, another realtor, said she’d never heard of this type of a deal during her multi-decade career as a realtor:

‘In almost 40 years as a realtor, I have never seen terms of sale that included seven years free rent back, not even seven months free rent back,’ Enos said.

‘What if the property does not close or the seller is unhappy with the results or work men don’t get paid and put a lien the property?’

‘The asking price reflects market value, which is essentially lot value, for this area … I empathize with the seller, but the terms and conditions for this sale I feel are unrealistic and may have negative legal ramifications.’

The listing for the 976 square-foot cottage also included a requirement for the buyer to pay for the expensive repairs needed.

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However, Mountain View’s status as a well-heeled tech hub – Google’s headquarters is located in the town, and companies including Microsoft and Samsung have offices there – has caused real-estate prices to explode over the past two decades, reflecting similar gains throughout the tech-focused Bay Area.

The realtor in charge of selling the location described it as having “all the conveniences of urban living” but in a secluded setting.

‘This is a location that’s hard to beat, tucked away in a quiet corner at the end of a small street,’ listing agent Daniel Berman said.

‘You’ve got all the conveniences of urban living, nestled in a secluded country-like enclave.’

We wonder: With Silicon Valley home prices soaring well beyond the means of most middle-class families, will we start to see more deals like this one? Already, a startup called Loftium has hit upon a similar concept. The commpany will front you the entire down payment if you just agree to rent out one of the rooms in your new house over Airbnb for a specified period of time.  But there’s a catch … for now Loftium is only available in Seattle.

Source: ZeroHedge

Jerry Brown Forbids Landlords from Cooperating with ICE to Deport Illegal Aliens

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California Gov. Jerry Brown signed a pair of new laws Thursday designed to protect illegal alien tenants from being threatened with deportation by making it illegal for landlords to report a tenant’s immigration status to Immigrations Customs Enforcement (ICE).

The bills were part of a package of laws pushed by the Democrat majority and signed by Brown ostensibly to protect illegal aliens from any increased enforcement measures under theTrump administration.

According to the Los Angeles Times,

One proposal by Assemblyman David Chiu (D-San Francisco) would bar landlords from disclosing information about immigration status in order to intimidate, harass or evict tenants without following proper procedures. It also would allow immigrant tenants to file civil claims against their landlords if they do.

Another bill by Assembly Majority Leader Ian Calderon (D-Whittier) would ensure that no state office or entity in California could compel a landlord to obtain and disclose information on a tenant’s immigration status.

The rationale behind the latest package of bills protecting illegal aliens, according to the Sacramento Bee, is fear of enforcement by ICE under President Trump, and fear that unscrupulous landlords might use a tenant’s illegal status to harass, intimidate or abuse them.

Chiu argues that tenants should not have to “live in fear” because they’re immigrants or refugees. He cited the legal uncertainty over young immigrants who were brought to the country illegally but have been educated here and hold down jobs as one of several reasons for the legislation.

“Trump’s escalating war on immigrants is ripping apart families and mass deportations could be our new reality,” Chiu said recently.

“This bill will deter the small minority of landlords who unscrupulously take advantage of the real or perceived immigration status of their tenants to engage in abusive acts.”

With the package of bills signed into law Thursday—including SB54 making California a “Sanctuary State” for criminal aliensCalifornia Democrats have kept their word to put the interests of illegal aliens first, ahead of legal, law-abiding California citizens.

By Assemblyman Tim Donnelly | Breitbart

Clayton Unveils New Tiny Home Design (video)

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Alcoa-based home builder Clayton Homes recently unveiled the newest addition to its tiny homes line. The Saltbox, the company’s second tiny home floor plan designed by Alabama architect Jeffrey Dungan, offers a modernized “lean-to” design that’s geared toward simple, yet stylish, living.

At 452-square feet, the structure features 270-degree views, real oak flooring, white quartz countertops, compact appliances, energy-efficient aluminum clad windows and doors, vertical shiplap wood siding and a covered porch.

“This really is a luxury home,” Jim Greer, Clayton’s tiny home brand manager, told The Daily Times during a private tour of The Saltbox model Thursday at Toqua Campground in Vonore. “A lot of the appliances and things like that are geared more toward the high-end.”

Permanent residence

Not only is The Saltbox larger than most other tiny homes, which are typically 400-square feet or less, Greer said the house is also built to state and local codes, meaning it’s affixed to a permanent foundation.

“A lot of the tiny homes out there are what’s considered a ‘tiny home on wheels’ that can be hooked up to the back of a truck and pulled around, so they’re built to an RV code,” he explained. “But the challenge in all that is where they can be placed. … A lot of people want to put one in a subdivision or on a piece of property and live in it permanently, but most of those really aren’t designed for that.”

The Saltbox, however, can be placed at any location and be lived in year-round.

“These houses go on a permanent foundation,” Greer said. “There’s no steel under the frame or wheels or anything like that. It’s basically the same as the foundation you build for a site-built home.”

While Clayton is experienced in site-built foundations, Greer emphasized that the concept is rather new to the tiny home world.

“We’re trying to be more innovative,” he said. “Plus, it gets around a lot of those planning and zoning challenges a lot of people face.”

Reaching new markets

Both The Saltbox and Low Country, the first design released by Clayton’s Tiny Homes division, are now available for public purchase, with pricing starting in the lower $100,000’s.

Greer said the company is exploring additional tiny home design options, including ones at lower prices.

“We’re looking at ways to fill the market for people who are maybe looking for different price points,” he said. “It’s something new and outside-the-box that we’re working on getting through.”

In fact, Greer said Clayton’s tiny homes line was born out of the company’s commitment to creating new products that target different groups.

“The whole company has a goal to keep trying different things and being innovative, and this is just an example of that,” he said. “We’re beginning to expand our reach and look at new areas.”

The main hope, Greer said, is to provide a solution for people who want to live smaller and simpler.

“That’s kind of where the tiny home movement began,” he said. “A lot of people want to just give up their things and live in a tent.”

By Rachael Totten | The Daily Times

Pending Home Sales Plunge; NAR Admits “The Housing Market Has Essentially Stalled”

After dismal drops in existing and new home sales, this morning’s pending home sales data for August was a disaster, tumbling 2.6% MoM (3.1% YoY) to its lowest SAAR since January 2016.

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This is the second YoY decline in sales in a row, with SAAR tumbling to its lowest since Jan 2016…

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Lawrence Yun, NAR chief economist, says this summer’s terribly low supply levels have officially drained all of the housing market’s momentum over the past year.

“August was another month of declining contract activity because of the one-two punch of limited listings and home prices rising far above incomes,” he said.

“Demand continues to overwhelm supply in most of the country, and as a result, many would-be buyers from earlier in the year are still in the market for a home, while others have perhaps decided to temporarily postpone their search.”

With little relief expected from the housing shortages that continue to plague several areas, Yun believes the housing market has essentially stalled.

Further complicating any sales improvement in the months ahead is the fact that Hurricane Harvey’s damage to the Houston region contributed to the South’s decline in contract signings in August, and will likely continue to do so in the months ahead. Furthermore, the temporary pause in activity in Florida this month in the wake of Hurricane Irma will slow overall sales even more in the South.

Yun now forecasts existing-home sales to close out the year at around 5.44 million, which comes in slightly below (0.2 percent) the pace set in 2016 (5.45 million). The national median existing-home price this year is expected to increase around 6 percent. In 2016, existing sales increased 3.8 percent and prices rose 5.1 percent.

“The supply and affordability headwinds would have likely held sales growth just a tad above last year, but coupled with the temporary effects from Hurricanes Harvey and Irma, sales in 2017 now appear will fall slightly below last year,” said Yun.

“The good news is that nearly all of the missed closings for the remainder of the year will likely show up in 2018, with existing sales forecast to rise 6.9 percent.”

Of course, none of those fun-durr-mentals matter…

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Source: ZeroHedge

U.S. Cities With The Biggest Housing Bubbles

This is how monetary policies have crushed the value of labor.

For the good folks who hope fervently that the Fed doesn’t have reasons to raise rates or unwind QE because there isn’t enough inflation, here is an update on one aspect of inflation – asset price inflation, and particularly house price inflation – where the value of your hard-earned dollars has collapsed over a given number of years to where it takes a whole lot more dollars to pay for the same house.

So here are some visuals of amazing house price bubbles, city by city. Bubbles really aren’t hard to recognize, if you want to recognize them. What’s hard to predict accurately is when they will burst. Normally the Fed doesn’t want to acknowledge them. But now it has its eyes focused on them.

The S&P CoreLogic Case-Shiller National Home Price Index for June was released today. It jumped 5.8% year-over-year, not seasonally adjusted, once again outpacing growth in household incomes, as it has done for years. At 192.6, the index has surpassed by 5% the peak in May 2006 of crazy Housing Bubble 1, which everyone called “housing bubble” after it imploded (data via FRED, St. Louis Fed):

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The Case-Shiller Index is based on a rolling-three month average; today’s release was for April, May, and June data. Instead of median prices, it uses “home price sales pairs,” for example, a house sold in 2011 and then again in 2017. Algorithms adjust this price movement and add other factors. The index was set at 100 for January 2000. An index value of 200 means prices have doubled in the past 17 years, which is what most of the metros in this series have accomplished, or are close to accomplishing.

Real estate is local. Therefore real estate bubbles are local. If enough local bubbles balloon at the same time, it becomes a national housing bubble. As the above chart shows, the US national Housing Bubble 2 now exceeds the crazy levels of Housing Bubble 1, and in all ten major metro areas, home prices are setting new records.

In the Boston metro, the home price index is now 11% above the peak of Housing Bubble 1 (Nov 2005):

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Home prices in the Seattle metro have spiked over the past year, pushing the index 20% above the peak of Housing Bubble 1 (Jul 2007):

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Then there’s Denver’s very special house price bubble. The index has soared a stunning 43% above the peak of Housing Bubble 1 (Aug 2006):

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People in the Dallas-Fort Worth metro felt left out during Housing Bubble 1, when prices rose only 13% in five years, while folks in other parts of the country were getting rich just sitting there. They also skipped much of the house price crash. But they know how to party when time comes. The index has now surged by 42% from the peak in June 2007:

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The Atlanta metro, where home prices had plunged 36% after Housing Bubble 1, has now finally squeaked past the prior peak by 2%, with a near-perfect V-shaped bubble recovery:

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Portland’s home prices have kicked butt since 2012, with the index soaring 71% in five years – not that homes were cheap in Portland in 2012. Portland’s house price bubble is now 20% above the peak of Housing Bubble 1:

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The San Francisco Case-Shiller Index, which covers the five-county Bay Area and not just San Francisco, is now 10% above the insane peak of Housing Bubble 1. During the last housing crash, the index plunged 43%. Eight years of global monetary craziness has sent liquidity from around the world sloshing knee-deep through the streets, which has performed miracles:

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Los Angeles home prices performed similar feat, doubling from 2002 to July 2006, before giving up two-thirds of those gains, then soaring once again. The index is now 3% above the peak of totally insane Housing Bubble 1:

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New York City condo bubble never saw the crash in its full bloom. Prices are now 19% above the peak of the prior bubble (Feb. 2006). Over the past 15 years, the index has soared 112%:

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While the monetary policies of the past eight years have had no impact on wage inflation in the US, and only moderate impact on consumer price inflation, they’ve been a rip-roaring success in creating asset price inflation.

Asset price inflation means that the dollar loses its value when it comes to buying assets. Wage earners, when they’re trying to buy assets today – not just homes but any type of asset, including buying into retirement plans – are finding out that their labor is buying only a fraction of the assets that their labor could buy eight years ago. This is how these monetary policies have crushed the value of labor.

By Wolf Richter | Wolf Street

 

Professional Woman Quits Expensive Rents To Live In A Van

A 31-year-old professional woman has turned her back on expensive rents and property prices – by living full time in a van. With an interior measuring just 13ft 2in long, 5ft 8in wide and 6ft 2in high, Eileah Ohning’s home is her Freightliner Sprinter High Top van. The photographic producer from Columbus, Ohio, has lived in her compact four-wheel home since May 2017. Complete with a memory foam mattress, storage compartments, a desk and a camping stove, she even has plans to add in a shower, toilet and fridge. Eileah parks her van close enough to her workplace that she never needs to worry about the morning commute and showers at her local gym.