j.r. leonard

We’re 2 years from full employment in a housing bust driven recession, so lack of a full recovery in housing isn’t that surprising

The scale of the tightening of lending is so huge that it really outweighs the other factors. Consider how odd it is that there is supposedly a housing affordability problem, but sales of new homes under $200,000 is down more than 80% from pre-2006 levels.

The only owner-occupiers that can get mortgages are those who would buy homes worth more than $200,000. There are two different markets today. A functioning high end market and an entry level market mostly now dominated by investors.

Whys the driver? Is it because the entry-level markets are in he places without great jobs?

It's not for lack of demand for shelter (including the ability to pay). Rents are rising. It's a lack of funding for purchase. That ends up limiting new supply, which leads to rising rents, which entry level households must pay because they can't get mortgages.

But is it lack of supply or that entry-level households have too little income/too much debt?

If they have too little income, then why are they able to pay higher rents?

I don’t know. That’s my question. I’m trying to understand the mechanism by which mortgage credit is being rationed. There doesn’t seem to be a shortage of other consumer debt, but again, I don’t know