The renterfication of the United States: Modern day feudalism in America where mega landlords rent property out to the working serfs.
ByThere has been a strong growth in renting households over the last five year. Even home builder optimism and permits are perking up but a large push is coming from builders putting up multi-unit properties. In other words, rentals. For most Americans with a positive net worth, most of it is tied up in their real estate equity. Consider a home a forced savings account (you have to sell to unlock that equity). But as the low interest rate environment swept the nation, big banks and investors decided to try their luck in being landlords. After all, you just had 10 million people lose their homes to foreclosure and they will need to live somewhere. Like a simple math equation, we’ve also gained 10 million renter households in the last decade. Yet this trend is continuing even in the face of our six-year recovery. You are seeing in China how quickly psychology can turn. The real estate market in China has slowed down considerably so people were plowing money into the stock market where valuations were ridiculous. The market in China has lost close to $3 trillion in market cap recently. So much for prices only go up. And of course if this is more than a tiny trend and a real correction, some of the hot money from Asia may start slowing down as when the Nikkei imploded. These are outside forces and for most Americans, renting is becoming the economic choice…
