Wednesday, December 16, 2015

Rental Nation

We introduced the concept of disposal to the world, but convenience can't hide serious problems. Our poor paying economy has forced us into renting instead of owning. We no longer move for better opportunities, but dispose of apartments like fast food throw-a-ways. This ugly recognition gathered steam after the 2008 crisis sent waves of "keys-in-the-mail" foreclosure's that added millions to the renting folds. There are now 9 million more renters than there were just ten years ago. Granted, our population is over 300 million and that helps the stats, but the addition of 350,000 every month never is mentioned in the unemployment figures. However, one thing at a time.
Study
a recent report by the Harvard Joint Center for Housing Studies says 43 million families which is 1 in 5, are suffering from rising rental costs. Today, rent consumes 30% of monthly income. In some locations like New York, San Fran, it is worse. The study finds that renters there use 50% of income for rent. Ouch! You can add my landlord to the greedy Scrooges. He raised my lease by 16.5%. SOB! These "severely" effected renters went from 7.5 million to 11.4million in the last 10 years and when you consider wages are stagnant to down by 9% since 2001, this is another fork in the misery index. Funny, none of the candidates from either party touches this topic.
Bottom Line: 49% are suffering and another 26% are close to homelessness.
To make matters worse, rental occupancy is at its highest, so the Scrooges out there can continue to put it to you. This leads to another problem: home ownership. When Scrooges raise their rent, we cannot save for future plans like our own home because there is no "disposal" money leftover. Then again, I can understand the thinking in "tiny" home new construction. Maybe VW will bring back the bus / van and with some flowers on its side? I can visualize my new home because wages are too low to save foe anything better.
Related Study
by the Pew Study found that the middle class is shrinking. I have been saying this for the last ten years. It said in 1971 the middle class composed 61% of our society. Today, it is falling at 50% and the poor / lower class was 16% and now, 20% and rising. This is based on income of $41k plus for a family of three. In fact, if you combine the upper with the lower, they outnumber the middle class. Personally, I see these figures very conservative.
Retirees
You better get your money NOW! I have warned you repeatedly, dear reader about the aspect that leverage and debt mask the fact that there is NOT enough money in circulation to cover our claims. Last week 3rd Ave Management blocked redemptions. They won't return your money. How are you going to pay your rent or mortgage? They are not alone. Stone Lion is also blocking redemptions. The Wall Street Journal reported that this year, junk bonds will lose money. They added that the 30 year average of defaults is 3.8% and they see 4.6% in 2016. Get your money, now before the lawyers get it.