Friday, October 31, 2014

Halloween Fright Fest: Long-Term Housing (Musical Tribute)

The following chart shows annual new privately-owned housing units completed divided by total nonfarm employees.

If the blue exponential trend line (2.1% annual growth rate) represents a delusional long-term prosperity belief, then what does the orange exponential trend line (14.4% annual growth rate) represent?

Here is a hint.

October 29, 2014
Rents are soaring -- and so are evictions

Rents have risen 7% in the past year, while incomes have inched just 1.8% higher -- making it that much harder for people to afford their housing payments. In fact, the average renter now spends 30% of their income on rent, up from a longtime average of about 25%, according to Zillow.

If people can't afford to rent, then how can they afford to save up the money to buy a house?

Happy Halloween!

Source Data:
St. Louis Fed: Custom Chart

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