Fannie Mae-No Politics (FNMA)

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The NEW Affordability Crisis in Housing (House Prices And Apartment Rents Rising While Income Remains Stagnant)


The Federal Reserve’s zero interest rate policy and quantitative easing programs are contributing to rising home prices and apartment rents while not contributing to household income gains. The result is the “new” housing affordability crisis or as The Talking Heads sang “Burning Down The House” as in burning down housing affordability.

Bloomberg: The U.S. apartment-vacancy rate rose for the first time in almost five years, a sign that supply is starting to catch up to rental demand after a boom in multifamily construction.

The vacancy rate rose to 4.2 percent in the third quarter from 4.1 percent the previous three months, the first increase since the end of 2009, Reis Inc. (REIS) said in a report. Net leasing gains of 37,233 units lagged behind the 46,055 new units completed, the New York-based real estate research firm said.

Although the rise in the apartment vacancy rate is small (in the red circle), it may be a turning point if it repeats for several months. Notice that homeownership rate continues to fall as real median household income is making feeble increases.

apartvacrent

Then again, mortgage purchase applications remain in “Death Valley”, incomes are stagnant or rising slowly, but home prices and effective apartment rates are rising.

hpent

Is The Federal Reserve contributing to the this neo-affordability crisis with its flooding of capital markets with liquidity? It appears that the third round of quantitative easing (and The Fed;s zero interest rate policies) are associated with rapidly rising house prices and apartment rents, but NOT real median household income and mortgage purchase applications.

fedrents

The is the NEW affordability crisis where cheap money benefits investors who drive up asset prices (but not family income).

Is The Fed helping “Burn Down The House?” At least, burning down affordability.
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