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Decade After Housing Peaked: Owners Richer, Renters Hurting

2stepz_ahead Who I am is Complex, What i am, simply put. I'm a Threatwalking out the lions denGuests, Members, Writer, Content Producer Posts: 32,324 ✭✭✭✭✭

It's a troublesome story playing out across America in the 10 years since the housing bubble peaked and then burst in a ruinous crash: As real estate has climbed back, homeowners are thriving while renters are struggling.

For many longtime owners, times are good. They're enjoying the benefits of growing equity and reduced mortgage payments from ultra-low rates.

But for America's growing class of renters, surging costs, stagnant pay and rising home values have made it next to impossible to save enough to buy.

The possible consequences are bleak for a nation already grappling with economic inequality: Whatever wealth most Americans possess mainly comes from home equity, meaning that the increase in renters gives fewer people that same level of financial security.

Nearly two-thirds of adults still own homes. And some who rent do so by choice. Yet ownership has become a more distant dream for the many Americans, as rental prices and demand has surged in areas that offer the best job prospects as well as those that have been battered by foreclosures.

"It doesn't paint a pretty picture," said Svenja Gudell, chief economist at Zillow, the online real estate database company. "You're really blocking out a group of buyers from owning a home. They're truly living paycheck to paycheck, and that does not put them into a good position to buy."

Joe Fabie and his wife face just such a bind.

They moved to Mount Pleasant, just over the bridge from historic Charleston, South Carolina after law school in Pittsburgh. The suburb's pastel-hued harbor vistas, tin-roofed houses and Spanish moss-adorned live oaks were enchanting.

But the rising rent on their one-bedroom apartment made it impossible to save enough to buy a home. So the couple moved to a cheaper suburb in hopes of saving for a starter home.

"The best school district is Mount Pleasant, and we would like to be there," said Fabie, 27. "But if you're lucky you can get some beat-up homes for around $300,000."

An exclusive analysis by The Associated Press of census data covering over 300 communities found that two major forces are driving a wedge between the fortunes of renters and homeowners:

—Historically low mortgage rates have enabled homeowners to refinance and shrink their monthly payments, thereby reducing a major household cost. The median annual mortgage expense for a U.S. homeowner has dropped by $1,492 since 2006.

—A combination of foreclosures and new college graduates crowding into the strongest job markets has raised demand for rentals. Renters accounted for all the 8 million-plus net households the United States added in the past decade. Home ownership has dipped to 63.5 percent, near a 48-year low.

That demand has driven up rents, which, in turn, have prevented or delayed people from buying first homes. Outside of a pocket of relative stability seen in parts of the Midwest such as Minneapolis and St. Louis, the momentum has moved away from ownership.

The residue of the housing bubble remains achingly visible in Las Vegas. Thousands of houses are stuck in the foreclosure pipeline, controlled by banks, and could flood the market should prices recover enough. Nearly half of Las Vegas now rents, compared with less than 40 percent a decade ago.

Consider the shift toward renting in Piedmont Park neighborhood of Apopka, a former agricultural hub outside of Orlando now crowded with housing developments.

Where one in 10 homes once was a rental, now more than a third are. Many are owned by Wall Street investment firms that bought them out of foreclosure at deep discounts.

Erika Pringley, a 42-year-old police dispatcher, rents with her husband a three-bedroom ranch house. Through a string of subsidiaries, the house is owned by Blackstone, the world's largest real estate private equity group.

At that price paid by investors, the equivalent of the monthly mortgage would be under $500.

Pringley's rent: $1,310 a month.

Pringley, who works for the Florida Highway Patrol, hopes to buy a home — if she can emerge from debt.

"At my age, I want to own something that's my own, have something that's my own," she said.

Higher rents are closing the path of accruing wealth through ownership. On average, homeowners have a net housing wealth of $150,506, according to figures soon to be released by the Urban Institute's Housing Finance Center.

Elsewhere, rising prosperity is the reason why renters are stuck.

Just as the economy tanked nearly a decade ago, millennials began flooding the best job markets after college and graduate school where rents are disproportionately higher.

Over the past decade, the number of under-35 college graduates in Washington rocketed up more than 50 percent to nearly 100,000. Bistros, boutiques and posh apartments opened along the once-downtrodden 14th Street corridor.

All this has created a paradox in Washington: Incomes are rising — normally fuel for home buying — even as homeownership is declining.

Ultra-low mortgage rates below 4 percent have enabled Jim Phillips, 51, to capitalize on the influx, buying condos and renting them at a profit.

"With more and more younger people moving into the city, it's creating an opportunity for me," Phillips said. "So far, I have two condos. My goal is to buy, basically, one a year."

The opportunities are there for people who have money — or those who are already homeowners.

Alpana Patel and her husband landed a house in San Marcos, California, about 35 miles from San Diego, in 2007. To buy their $845,000 home, they took out an interest-only mortgage with an adjustable rate starting 6.7 percent. Including property taxes and insurance, their monthly costs totaled about $6,000.

The couple refinanced in 2013 at a rate of just 3.75 percent, which shrank their monthly payment by $2,000.

The couple eventually decided to rent out that house at a price that covers nearly all their mortgage costs and to buy a second, larger home where they could live.

"Now, we're able to own two homes because we hung in there," Patel said.


  • LPast
    LPast Members Posts: 4,546 ✭✭✭✭✭
    I never understood the benefit of long term renting.
  • MrMinimalist
    MrMinimalist Members Posts: 787 ✭✭✭✭✭
    The rent is too damn high!!
  • King Erauno
    King Erauno Members Posts: 6,754 ✭✭✭✭✭
    id rather rent. less overhead and headache. more money in your pockets in the long run
  • MrMinimalist
    MrMinimalist Members Posts: 787 ✭✭✭✭✭
    id rather rent. less overhead and headache. more money in your pockets in the long run

    Rents are increasing every year. People could be paying less with home insurance and taxes than people who are renting every month unless you split rent money.
  • RobCoLife
    RobCoLife Only finger I point is the middle one in the air! Fortress of Solitude Members Posts: 1,376 ✭✭✭✭✭
    ^^^He is right.
  • Lou Cypher
    Lou Cypher Make Reasonable Choices. H. E. Double Hockey SticksMembers Posts: 52,521 ✭✭✭✭✭
    @not_osirus_jenkins can you hire me for something and teach me how to make money?
  • Lou Cypher
    Lou Cypher Make Reasonable Choices. H. E. Double Hockey SticksMembers Posts: 52,521 ✭✭✭✭✭
    I rarely call in sick.
  • not_osirus_jenkins
    not_osirus_jenkins Sion Members, Banned Users Posts: 3,670 ✭✭✭✭✭
    Lou_Cypher wrote: »
    @not_osirus_jenkins can you hire me for something and teach me how to make money?

    Aye @Lou_Cypher I was dead ass about coming up to Alaska my pale skin friend. If you still want to be in the marijuana industry I got you.
  • Lou Cypher
    Lou Cypher Make Reasonable Choices. H. E. Double Hockey SticksMembers Posts: 52,521 ✭✭✭✭✭
    I got high and forgot. I promise once im getting paid i will take notes and not forget things. Im responsible.
  • dallas' 4 eva
    dallas' 4 eva Dallas Cowboys 2016 NFC EAST CHAMPS Members Posts: 11,217 ✭✭✭✭✭
    @Lou_Cypher is one funny ass 🤬 .
  • not_osirus_jenkins
    not_osirus_jenkins Sion Members, Banned Users Posts: 3,670 ✭✭✭✭✭
    @Lou_Cypher is one funny ass 🤬 .

  • Allah_U_Akbar
    Allah_U_Akbar _Jay_ Members Posts: 11,147 ✭✭✭✭✭
    **owner post**
  • mrrealone
    mrrealone Members Posts: 3,793 ✭✭✭✭✭
    This is sad, but get it while its good.

    Bout to own one though. Tryna pay cash for it cause I ain't feeling them 30 year mortgages....
  • TheBoyRo
    TheBoyRo Members Posts: 13,647 ✭✭✭✭✭
    Anyone know anything about NACA and their process of buying a home without a down payment or closing costs?
  • rapmusic
    rapmusic Members Posts: 4,130 ✭✭✭✭✭
    Man I'm trying to get a house! 🤬 renting, you might as well just take money out of your check and throw it in the trash. There's not much of a difference
  • Mr.LV
    Mr.LV Members Posts: 14,089 ✭✭✭✭✭
    rapmusic wrote: »
    Man I'm trying to get a house! 🤬 renting, you might as well just take money out of your check and throw it in the trash. There's not much of a difference

    I feel the same way
  • EmM HoLLa.
    EmM HoLLa. Rolex Watches & Diamond Chains.. Members Posts: 3,255 ✭✭✭✭✭
    Hey, Whoever wrote that article is an 🤬 and doesn't know what they're talking about. It's not about how much money you have to put down on a house. It's about that credit score. I can get anyone on this forum to meet the requirements for an FHA loan that only requires 3.5% down payment on a home.

    Foreclosures are akin to gold my 🤬 . Buy them while you can. To put it into perspective, a 300k house is about to be foreclosed on for a say 90k debt. Foreclosures stay on credit reports for up to 7 yrs unless bankruptcy, but who wants that on the credit report right? You offer that person the full 90k and some restart money say 35k. That's 125k investment for a property that's worth more than twice that. Other people's Debt can make you a millionaire.

    Can we get more detail into this?. How do you go about making such an offer to a homeowner that is going through foreclosure?.
  • Like Water
    Like Water Integrity 1st Members Posts: 5,265 ✭✭✭✭✭
    My wife and I just finished this scenario. Got a VA loan, no down payment, a 3.6% interest rate on a house that just finished being built last week. Upper middle class suburb with a top 40 school system in the state... Rent, HOA fees and taxes and it's only 100 dollars more than the rent on the 2 bedroom, 2 bathroom apartment we're moving out of.

    That credit score was everything though. Me and the wife have all ours in the upper 700's. I know I'm somewhat of an outlier because of the VA loan, but you can still get a helluva deal if you have good credit.
  • King Erauno
    King Erauno Members Posts: 6,754 ✭✭✭✭✭
    gonna look for the article but i saw where it cost someone over 900k over the span of 30 years to pay for a 300k house. (total cost, insurance, tax, all that)
  • babelipsss
    babelipsss Members Posts: 2,517 ✭✭✭✭✭
    Start small. Buy empty lots, boarded up houses, storefronts in low income areas. Research the address, contact the owners and make an offer. Stick with it and eventually you will strike gold.
  • rapmusic
    rapmusic Members Posts: 4,130 ✭✭✭✭✭
    How does buying a foreclosure work?
  • [Deleted User]
    [Deleted User] Posts: 0 Regulator
    The user and all related content has been deleted.
  • texas409
    texas409 Members Posts: 20,854 ✭✭✭✭✭
    what about first time buyers with decent credit?