The next housing crisis is here - Yahoo Finance
See my post below about new housing starts staying very low since the recession. Here's one view saying that there are few new starter homes on the market, the ones that exist are getting bought up by investors, and mortgage lenders are still picky about making loans. That's all supply side. But I think at the core of the housing market problems is one simple demand side fact: an awful lot of young people can't afford to buy starter homes. That's why developers aren't building them. Millennials are saddled with student loans, many of them are working in jobs that don't pay much so they can't save a down payment, and government is doing bupkis to address these problems. So lenders don't see them as good credit risks.
Thanks to Fred Pilot for this link.
"Following the mid-aughts housing bubble that saw homeowners across the country get themselves upside down in homes and mortgages they couldn't ever afford to repay — a crisis that was as much about too much supply as it was about too much bad financing — the market has gone the complete other direction. First-time homebuyers are crowded out, with Trulia's chief economist Ralph McLaughlin writing Monday that the number of starter homes on the market has declined 43.6% in the past four years. Homeowners who want to move from a starter home to something better can't afford the next step. McLaughlin notes that the number of "trade-up" homes on the market is also down about 40% over the same period. Meanwhile, mortgage lenders, despite record-low rates, are still reluctant to extend credit to less-than-superb borrowers. And as investors look for places to earn whatever return on capital they can muster, the low end of the housing market has almost ceased to exist as the investor class has bought up homes with the plan to flip them."