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TRENDS ON THE U.S. ECONOMIC FRONT

U.S. HOME PRICES RISE RECORD. MIDDLE CLASS DREAM DYING

March 1, 2022March 1, 2022
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Home prices rose a record 18.8 percent last year, according to the S&P CoreLogic Case-Shiller National Home Price Index, the fastest rate since the index was created in 1987.
The index tracks average home prices in major metro areas across the U.S. 
The Federal Housing Finance Authority calculated a 17.6-percent increase in home prices through 2021.
Prices were driven higher by a combination of near record-low mortgage rates, federal stimulus payments that gave more households cash for larger down payments, and the shift to remote work that enabled employees to relocate farther from city centers to areas where homes were cheaper and more spacious.
The soaring demand for houses pushed the average selling price of single-family homes to $350,300 in January, 15.4 percent more than a year earlier, the National Association of Realtors (NAR) reported.
The demand surge created a shortage of available houses, sparking bidding wars that drove selling prices in some areas to $20,000 or more above asking prices, as we reported in articles such as “Fed Policies Continue to Fuel Housing Frenzy” (22 Jun 2021) and “Median U.S. Home Price Sets Another Record” (29 Jun 2021). 
Lenders, leery of lending during the COVID-era economy, prioritized borrowers able to make the largest cash down payments.
As a result, young, modest-and-middle-income families have been increasingly shut out of home ownership.
The proportion of homes sold to first-time buyers in January slipped to 27 percent, compared to 33 percent a year before, the NAR said.
Now mortgage rates have begun to rise, reaching an average of 3.92 percent for a 30-year, fixed-rate loan, compared to loans charging as little as 2.65 percent last year.
Higher rates are cooling the housing market, Selma Hepp, CoreLogic’s deputy chief economist, told The Wall Street Journal.
“The surge in mortgage rates is likely to take a bite out of the demand for housing, mostly among first-time buyers and those with limited budgets,” she said.
TREND FORECAST: As we have pointed out repeatedly, potential buyers locked out of the market for homes of their own are being locked into a lifetime of renting: demand for apartments has soared and remains strong, which has brought private equity investors into the landlord business, raising rates and ensuring that their tenants can never save enough cash to make a down payment on a home of their own. 
Thus, investing in multi-family units will be on going OnTrendpreneur® trend for both big and small. 
Lifetime renters are deprived of the main way in which Americans build and store wealth: by creating equity through home ownership. We have documented this end to the American Dream in: 

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