We have heard the good news. The housing new home market is booming. It is, indeed: for rental units.
But what about single-family homes to sell to the middle class? Not so much.
Home ownership is lower now than it was in 2007.
This means that the construction boom is targeting renters. Why? Because the families that would normally buy a home are still out of this market. The recovery has not made them eligible for buying housing.
But what about the decline in foreclosures? Lenders are not foreclosing. But they are still sitting on millions of empty homes or homes occupied by owners who stopped making mortgage payments years ago.
The buyers are investors. They are people who see a major opportunity to lock in low, 30-year mortgage rates and then let renters pay off these mortgages.
This puts the Federal Reserve to work for you. Bernanke inflates. Rates remain low. It’s lock-in time!
Then is the housing recovery real? For investors, yes. The big money is getting in on the deal.