Housing becomes even less affordable, and more people end up renting, and so rents go up,… until something breaks or is broken.
By Michael Every of Rabobank: US stocks decided to stage a hefty rally yesterday “because stocks”. That’s not that unusual for said market, but the excuse for why this happened was intellectually lazier than usual.
Apparently it was housing starts data that did the trick at 0.3% m/m rather than -1.6% expected. If so, we hardly have firm foundations for such optimism. First, it’s a volatile series. Second, builders reported soaring prices for the stuff needed to construct homes across the board. Third, starts of single-family homes --you know, the American dream-- were -1.7% m/m, while starts of multi-family units --you know, the American nightmare-- were up 7.5%. In short, fewer houses and far more luxury condos and low-end rental housing to squeeze all the people into who, despite living in a land with nothing but land, can no longer afford a home.