You would think the housing market had hit bottom in 2008 or 2009. But you would be wrong. The Wall Street Journal reports:
Sales of new homes hit another record low in February, plunging 16.9% to a seasonally adjusted 250,000. We’ve known for several years that these are tough times for builders, but those tough times are dragging on and on. We recently reported that housing permits tumbled to the lowest level in more than 40 years.
Plus, prices continue falling. The median sales price for a new home sold last month was $202,100, down 13.9% from a month earlier. It was, according to our Journal colleagues, the sharpest monthly price decline on record and the lowest median price since December 2003. The story for existing home sales isn’t much better.
Indeed, the delinquency rate om mortgages that back those toxic securities is just now hitting an all-time high. Americans are finally giving up on the American Dream altogether. At HuffPo, Lila Shapiro notes that housing sales are at a half-century low and correlate with unemployment:
While the working age population is steadily rising, the size of the labor force is actually shrinking. And those Americans who have grown so discouraged that they have given up looking for work — around 4.9 million as of last month — are unlikely to be in the market for a house.
It would be easy to say the United States has too many houses, but that would be wrong. There is some evidence that younger workers are refusing the suburban commute and adding to urban density, but there’s no shortage of urban housing either. What’s in short supply are Section 8 “gummint housing” units:
Without sufficient funds to renovate and preserve public housing, many developments could deteriorate to the point where they would have to be demolished or sold. From 1995 to 2008, more than 165,000 public housing units were lost and not replaced by new public housing. Tens of thousands of additional units have been removed from the stock since then. (Emphasis mine)
I’d bet that if I had struggled to make ends meet for two years, been unable to find new work, and watched my 401k implode, I’d be ready to give up in frustration too — especially if, like so many American homeowners, I had experienced outright fraud by Bank of America. Millions of formerly middle-class Americans are now living with family, renting apartments, or in public housing. Housing usually leads economic recovery; this time it’s lagging.