New York Fed Discovers That We Are in Fact Turning Into Japan

That’s two NY Fed studies in a row that I approve of. This is good stuff. Now, Andreas Fuster, Basit Zafar, and Matthew Cocci furnish us with, “Why Aren’t More Renters Becoming Homeowners?

It’s a crucial question because it’s quite possible for land market failure to cause people’s incomes to be too low for them to move into houses, which depresses future expected land values, and hence future economic growth, like Japan. It certainly doesn’t help us that our intrepid authors admit that first-time homeowners amount to 30 to 50 percent of buyers, and that “in the time series, renter-to-owner transition flows tend to lead the business cycle and house price growth.”

So basically, under normal conditions young families think things are getting better, so they jump onto the land value train. I wrote about this as social reproduction a while back. The Fed economists turn to the Survey of Consumer Expectations to answer why this isn’t happening.

For one, they find that not even 45 percent of current renters expect to move and buy in the next three years. No idea how that compares to past years. Then they discuss the reasons renters who rate the likelihood of such a move at 60 percent or less gave.

Too much debt and too little income. Hope those debts aren’t those student loans I keep reading aren’t causing any economic damage ’cause that’d just makes the problem worse. The study doesn’t find much evidence of skittishness about future housing prices falling, which you can take as you will.

If you want to see how bad things are, here’s the number of households by age bracket and their respective homeownership rates from the Census Bureau’s Housing Vacancy Survey (Table 12).

Total Households by Age Bracket

Homeownership Rates by Age Bracket

Maybe we should rename the country the United States of Houses Owned Only by Old People. USHOOOP works for me.



  1. Land had traditionally been fairly worthless throughout human history. Sure you wanted to have land, it made you a noble, but having people work the land so you didn’t have to work is really what got you by. The Serfs had land but it certainly didn’t help them much.

    The post 1950s US experiment is the actual anomaly. But higher education and debt managed to destroy that, as well as the failure to practice protectionism to favor US citizens and give them value.

    Without an inherent value to US citizens, it became clearly apparent that worthless titles and pieces of paper were not going to do that. There is no need for highly intelligent individuals to run business, that was always a farce designed to award high level positions to the connected, the real need was to utilize human capital and carefully control people to resources.

    The US failed miserably by allowing foreigners in and giving businesses access to them as employees, then indebting young people and preventing opportunity.

    The only way to correct that is now to ban foreigners from holding US jobs, and ban outsourcing. Then a reduction in population growth, until the supply falls below demand, forcing the spreading of resources. A high top line tax rate along with little to no taxes on the vast majority of other earners would also help.

    Sound radical? Well, actually, that was the economic model until Reagan showed up in the 80s.

  2. Well I wouldn’t dream of that happening. America needs to grow up and be their own person. Problem? Americans are LAZY! We result in employing foreigners to do our dirty work and the result, we degrade as a nation. Just saying.

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