Dr. Housing Bubble 09/17/2014

[Crewleader]

The destruction of traditional mortgage demand: Applications for mortgages hits a 14 year low and affordability for housing continues to decline.

There is a fine line between using debt wisely and being a slave to crippling loans. Unfortunately most Americans have used debt as a meal replacement for actually saving and are now entering their older years with very little saved. Liquid asset anorexia. It should be telling that purchasing a car, an item that depreciates the instant you set your rear in the leather seat, has some of the easiest financing the world has ever seen. Zero percent loans are common but when you look at the underlying price tag, the cost is actually very high. College loans are given to students with zero income on the future prospect they will generate enough income to carry their loans. Not a big deal when you take on $5,000 a year but what about $40,000 a year? As we are seeing, many young adults are having to move back home with mom and dad as grown adults merely to pay their bills, many times in car loans and student debt. A similar phenomenon has occurred in housing where base cost is very high thanks to cheap financing. Low rate mortgages still cannot force demand if people are unable to service the debt. That is the problem we now confront today. It isn’t a question of the raw number in population growth. If for every doctor or engineer we create 10 to 20 McJobs, then where will the housing growth be? Homes are unaffordable even in the face of record low mortgage rates.

Nationwide affordability in housing is not good

http://www.doctorhousingbubble.com/mortgage-applications-14-year-low-housing-drops-decline-mortgage-affordability-index/