I thought a “housing crisis” was when people couldn’t find housing, not when it got cheaper. (NBC’s expert: “It’s very, very difficult to find any silver lining.” No it’s not.) …
Mickey is usually pretty interesting, but he should stick to something he knows a little about. If he thinks housing has become more “affordable,” let him go out and try to buy something in the new lending climate brought on by the housing crisis-caused liquidity crunch.
UPDATE: Mickey responds: One headline fits all. – By Mickey Kaus – Slate Magazine
**–Update: “Affordable housing,” and “housing crisis,” as traditionally used by critics on the left, includes rental housing. If the credit crunch prevents people from buying houses, and those houses are sitting around unsold, they’ll be rented, no?
Well, not exactly.
Even as Bay Area home values weaken, a new report shows rents are soaring – indicative of the curious mix of a sturdy economy and a faltering housing market.
Average monthly rents in the region’s financial and high-tech hubs have jumped more than 10 percent in the last year, and occupancy rates hover around 95 percent, according to a quarterly rental survey by RealFacts.
While robust hiring is boosting apartment prices, the purchase side of the market languishes amid the subprime crisis and a supply of homes for sale that far outstrips demand.
“We have very strong employment, and typically it increases demands for rentals and raises home prices,” said Michael Carney, director of the Real Estate Research Council of Northern California. “But because we’ve had these problems with the mortgage market, the shift is toward rentals.”
It helps to understand real estate markets. Sure, some will be rented. Eventually. But the crisis has drastically increased the number of people looking for rentals. So the market reacts as it always does, and rentals become more expensive. The big difference between renters and purchasers, of course, is credit. And the credit crunch created by the housing collapse has created a whole bunch of new renters whose credit will no longer permit them to purchase.
FURTHER UPDATE: Of course, a recession and rising unemployment could relieve pressure on the rental market by removing that “robust hiring” from the equation, but I don’t think the net result would be more affordable housing. It would be a race toward the bottom, with wages very likely dropping faster than rents. Unemployment checks aren’t usually considered the bulwark of a strong economy.