How Much Income You Need To Afford the Average Home In Every State

This report was originally published by Tyler Durden at Zero Hedge

The housing market has not only recovered its pre-recession levels, but some observers are actually starting to worry about yet another housing bubble. Housing prices are on the rise, thanks in large part to extremely tight inventory, so it’s worth asking:  are potential home buyers getting priced out of the market? The answer depends on where they live and how much money they make.

HowMuch.net collected average home prices for every state from Zillow which we then plugged into a mortgage calculator to figure out monthly payments. Remember, mortgage payments consist of both the principal and the interest for the loan. The interest rate we used varied from 4 to 5% in each state, depending on the market. The lower the interest rate, the lower the monthly payment. To keep things simple, we assumed buyers could contribute a 10% down payment. Another thing to keep in mind is that financial advisors commonly recommend the total cost of housing take up no more than 30% of gross income (the amount before taxes, retirement savings, etc.). Using this rule as our benchmark, we calculated the minimum salary required to afford the average home in each state.

Source: HowMuch.net

Top Five Places Where You Need the Highest Salaries to Afford the Average Home

1. Hawaii: $153,520 for a house worth $610,000

2. Washington, DC: $138,440 for a house worth $549,000

3. California: $120,120 for a house worth $499,900

4. Massachusetts: $101,320 for a house worth $419,900

5. Colorado: $100,200 for a house worth $415,000

Top Five Places Where You Need the Lowest Salaries to Afford the Average Home

1. West Virginia: $38,320 for a house worth $149,500

2. Ohio: $38,400 for a house worth $149,900

3. Michigan: $40,800 for a house worth $160,000

4. Arkansas: $41,040 for a house worth $161,000

5. Missouri: $42,200 for a house worth $165,900

Our map creates a quick snapshot of housing affordability across the United States. There are several pockets in which only the upper middle class and above can afford to own even the average home, most notably across the West and in the Northeast. There are only two states west of the Mississippi River where a worker with an annual salary under $40,000 can afford a mid-level home:  Missouri and Oklahoma. Colorado stands out as the only landlocked state requiring a significant amount of income ($100,200), thanks in large part to the housing market around Denver.

Homes tend to be more affordable in the eastern half of the country, with a notable pocket of “green” (less expensive) states located in the upper Midwest. The North is generally more affordable than the South and the typical home is significantly easier to buy in places like Michigan or Ohio than in Louisiana or Arkansas.  Additionally, our map indicates that workers can more easily afford homes in the East than in the West, which is surprising given how much more land is available out West. It is important to note that there are certainly deep pockets of poverty in all of these places, which suggests that our map obscures the inequality behind averages.

The best takeaway from our map is that housing remains affordable in large swaths of the country, even though there will always be places like California and New York where there is simply too much demand for the available inventory. Thankfully, that doesn’t mean that buying a home is suddenly out of reach for average Americans in Ohio or Mississippi, for example.

Source: HowMuch.net

In Nearly 70% Of US Counties, The Average Worker Can’t Afford To Buy A Home

This article was originally published by Tyler Durden at Zero Hedge

Housing, as we’ve pointed out in the past, is perhaps the most reliable bellwether of widening economic inequality in the US. And in its latest quarterly report on housing affordability in the US, ATTOM discovered that median-priced homes aren’t affordable to average wage earners in an astounding 68% of US housing markets.

In its report, the company calculated affordability by incorporating the amount of income needed to make monthly home payments – including mortgage payments, property tax payments and insurance – on a median-priced home, assuming a 3% down payment and a 28% maximum “front-end” debt-to-income ratio.

That required income was then compared with the median home price.

The 304 counties where a median-priced home in the first quarter was not affordable for average wage earners included Los Angeles County, California; Maricopa County (Phoenix), Arizona; San Diego County, California; Orange County, California; and Miami-Dade County, Florida. Meanwhile, the 142 counties (32 percent of the 446 counties analyzed in the report) where a median-priced home in the first quarter was still affordable for average wage earners included Cook County (Chicago), Illinois; Harris County (Houston), Texas; Dallas County, Texas; Wayne County (Detroit), Michigan; and Philadelphia County, Pennsylvania.

Already, the “hottest” housing markets are seeing an exodus of working- and middle-class individuals who can no longer afford to pay the high rents – let along afford to set aside enough money for a down payment.

Eight of the top 10 counties with the highest median home prices in Q1 2018 posted negative net migration in 2017: Kings County (Brooklyn), New York (25,484 net migration decrease); Santa Clara County (San Jose), California (5,559 net migration decrease); New York County (Manhattan), New York (3,762 net migration decrease); Orange County, California (3,750 net migration decrease); and San Mateo, Marin, Napa and Santa Cruz counties in Northern California.

Furthermore, ATTOM’s data found that this problem is getting worse, not better, with 41% of housing markets less affordable than their historical average during the first quarter. That’s up from 35% the quarter before.

Meanwhile, a staggering 73% of markets posted worsening affordability compared with a year ago, including Los Angeles, Cook County (home to Chicago), Maricopa County (Phoenix) and Kings County (Brooklyn).

The counties where the average wage earner would need to spend the highest share of their income to buy a median-priced home are Baltimore, Bibb County (Macon, Georgia) and Wayne County (Detroit).

Continuing with the trend of home prices rising more than twice as quickly as wages, home-price appreciation outpaced wage growth in 83% of housing markets.

When Fed Chairman Jerome Powell warned last month that “valuations are still elevated across a range of asset classes” and that he fears “signs of rising non-financial leverage” it’s possible that he was still understating the problem.

Cost Of Housing Has Soared So High Americans Are Sliding Into Poverty

Housing prices in the United States continue to rise at unprecedented rates, forcing many into poverty. This worsening epidemic is explained well in a video by The Money GPS and it’s been engineered this way.

As nations increase taxes and regulations, the price of complying also goes up. Many of these hikes are passed onto to those who are already living paycheck to paycheck forcing them to live in poverty. “You came here for the truth, so let me unveil that for you,” says Money GPS.

 

Severe damage to the nation’s economy can occur when people don’t have disposable income. “People are spending a larger and larger share of their income on their housing. This is something they can’t avoid. It’s not as if they are buying a home and can be renting instead, we are talking about people who rent their homes. It’s very serious,” The Money GPS says.

“There’s definitely an issue with the amount that people spend on shelter, electricity, food, and other basic essentials…we have a big problem on our hands. It’s not being addressed and the bubble just keeps getting larger…they keep saying there’s a limited supply [of housing options].”

“The median asking rent for vacant rental units is consistently rising. when you rent prices continuously increasing specifically for vacant rental units.” All this is happening as the rate of homeownership declines as well. So perhaps there is some correlation between market saturation and prices, but we fail to account for the fact that property taxes put a heavy burden on homeownership and those taxes are passed on to renters in the form of higher rents.”

But the YouTube channel Bull Boom Bear Bust says this is all just a part of the global elitist’s plans to force more people into rentals and out of homeownership. According to the description of their video about this issue, it is becoming more and more clear that the central banking fiat currency system was designed to extract wealth from the poor and middle class and further enrich bankers that are creating a nation [sic] of debt servants.

“It’s a global plan,” says the narrator of the video. “These disasters and downturns in the economy are opportunities for the big money and big investors to come in and actually buy these homes.” He then discusses the reasons banks have for not foreclosing on properties right away, and it’s as simple as a wealth transfer from the middle and lower classes to the billionaires and investors:

“A reason why in some cases the banks don’t foreclose on the property right away, not only to keep the home off the market, but it also keeps the financial responsibility of the property onto the previous homeowner. So things like back due property taxes and fines for failure to keep the property up, banks don’t want to take on that responsibility, so technically in many cases, they’ll not take immediate foreclosure proceedings and in some cases, years and then the unpaid debt can come back and destroy the previous homeowner’s credit, and not hurt the bank.”

“This whole system…of the middle class being wiped out and the poor getting poorer, the increase in homelessness, the increase in people going into more and more debt, the shift from home ownership to home occupied to financial companies and institutions and investors owning these homes. This whole system has been engineered from the top down.”

He continues to explain that it all goes back to the Federal Reserve and was designed to break the average family while benefiting those already at the top. We often refer to these people as elitists. They are the politicians who are bought and paid for by corporations who push laws and regulations on the middle class that they themselves are exempt from and can profit immensely by doing. The entire system has been rigged to transfer wealth to the elites in the government and the deep state who pulls the strings.

1,000s Of "Micro-Homes" Sprout Up All Over Bay Area To House The Growing Homeless Population

Roughly one year ago we shared the plans of a billionaire real estate developer in San Francisco who wanted to build communities for the homeless in Bay Area neighborhoods using stackable steel shipping containers (see: San Fran Billionaire Luanches Plan To House Homeless In Shipping Containers).  Not surprisingly, the efforts were met with some resistance from the liberal elites of Santa Clara who, despite their vocal support of any number of federal subsidy programs for low-income families, would prefer that those low-income families, and their subsidies, stay far away from their posh, suburban, "safe places."

Alas, as the San Francisco Chronicle points out today, like it or not, the boom in "micro-houses" is just getting started in the Bay Area with nearly 1,000 tiny homes, with less than 200 square feet of living space, currently being planned in San Francisco, San Jose, Richmond, Berkeley, Oakland and Santa Rosa.

Planners say that’s just the beginning. “We’re very excited about micro-homes,” said Lavonna Martin, director of Contra Costa County’s homeless programs. “They could be a big help. They have a lot of promise, and our county is happy to be on the cutting edge of this one. We’re ready.”

 

Contra Costa has a $750,000 federal homelessness grant to pay for 50 stackable micro-units of supportive housing, and Richmond Mayor Tom Butt would like to see them in his city. Developer Patrick Kennedy brought a prototype of his MicroPad unit to Richmond in November, and county and city leaders say they are leaning toward choosing it.

 

“They’re very fine, and they make a nice-looking building,” Butt said. “They’d be good for anybody looking for housing.”

The beauty of the tiny units is that they can be built in a fraction of the time it takes to construct typical affordable housing, and at a sliver of the cost, which means a lot of homeless folks can be housed quickly.

The homes have also caught on in San Jose where the City Council just approved $2.4 million to build a village of 40 units to help house the homeless.  Of course, just like in Santa Clara, San Jose residents are lashing out at city officials over plans that they say will only serve to increase neighborhood crime.

San Jose resident Sue Halloway told the council she was afraid putting the village near residences would increase “neighborhood crime, neighborhood blight (and) poor sanitation,” and predicted that it would be “a magnet for more homeless.”

 

City Councilman Raul Peralez said he understands such concerns, but that “there are no facts surrounding these tiny homes and whatever blight or crime they might bring, because we haven’t done them yet.”

 

“I tell people you really have two options,” said Peralez, who said he wants the village in his downtown district. “You can allow the homeless to live on the streets, or you can provide not only shelter but services in a confined area — with security. In my mind, that’s a way better option for managing this community in an organized way.”

So, what do the stackable units look like?  As seen in the video below, prototypes from one manufacturer, MicroPad, come complete with full bathrooms and kitchens and have up to 160-180 square feet of living space...

“These micro-homes may seem small at 160 to 180 square feet, but they’re actually pretty spacious when you’re in them,” she said. “And they go up very fast.”

 

Kennedy’s MicroPads have showers, beds and kitchens. Individually they resemble shipping containers, but once they’re bolted together with siding and utilities, they look like a regular building.

...which is more or less considered a mansion by struggling New York artist standards...

Silicon Valley"s "Working Homeless" Shows How Hard Life Is In "Democrat"s Paradise"

Authored by Mac Slavo via SHTFplan.com,

Silicon Valley is the home to tech giants like Facebook, Apple, and Google. It’s also home to a surging working homeless population who live in dilapidated RV’s, tents, and their own cars, all thanks to the policies Democrats love to implement.

The surging number of those working in Silicone Valley and still unable to afford adequate housing should be a warning about big government, but it sure doesn’t seem like anyone is taking notice as their taxes continue to rise.

As governments creep toward socialism though, poverty becomes the norm, not the exception.

Silicon Valley has the highest median income in the nation. But a soaring tax burden and expensive regulations have caused housing prices to increase which has also caused homelessness to surge.

More than 10,000 people were living without shelter across San Jose and Santa Clara Counties on any given night in 2016, though that figure is probably low. Thanks to big government, the cost of living is not low.

An influx of tech workers along with decades of under-building (thanks again to the regulations of big government) has created a historic homelessness in the Bay Area.

The governments in California continue to attempt to control deadly Hepatitis A outbreaks caused by a booming homeless population and usually do so by taking even more from those who actually work. The cycle will continue: socialists governments will put a cheap band-aid on the gaping wound they created themselves.

Rather than freeing poor people from dependence on benefactors and bosses, they merely transfer the dependence to the state, leaving the least politically connected people at the mercy of the political process. – FEE

The one thing government has are programs to help those in poverty. But those have proven ineffective. And the one thing that will work is the very thing government refuses to do: Climb off the backs of those they pretend they want to help.

Progressives routinely deplore the “affordable housing crisis” in American cities. But it is the very laws that Progressives favor—land-use policies, zoning codes, and building codes—that ratchet up housing costs, stand in the way of alternative housing options, and confine poor people to ghetto neighborhoods. Historically, when they have been free to do so, poor people have happily disregarded the ideals of political humanitarians and found their own ways to cut housing costs, even in bustling cities with tight housing markets.  – FEE

Imagine just how much more money the working poor would have if the big government in California wasn’t stealing over half their income to implement the very rules and laws that continue to make “scraping by” even more expensive.

US Homelessness Rate Rose This Year For First Time Since 2010

Here’s one statistic about the US economy that you probably won’t find in President Trump’s twitter feed.

Thanks to a surge in homelessness centered around several large west coast cities, the overall rate of homelessness in the US ticked higher this year, the first increase since 2010, according to a survey from the Department of Housing and Urban Development.

The U.S. Department of Housing and Urban Development released its annual Point in Time count Wednesday, a report that showed nearly 554,000 homeless people across the country during local tallies conducted in January. That figure is up nearly 1 percent from 2016.

 

Of that total, 193,000 people had no access to nightly shelter and instead were staying in vehicles, tents, the streets and other places considered uninhabitable. The unsheltered figure is up by more than 9 percent compared to two years ago.

 

Increases are higher in several West Coast cities, where the explosion in homelessness has prompted at least 10 city and county governments to declare states of emergency since 2015.

The homelessness crisis is only one byproduct of the burgeoning wealth inequality in the US caused by the Federal Reserve’s decision to pump trillions of dollars of “stimulus” into the markets.

Central-bank money printing has caused asset valuations to balloon while wages for everyone but the most highly skilled workers have stagnated, as the chart below illustrates.

Ironically, the primary culprit that city officials and advocates for the homeless cite as the reason behind the spike in homelessness is a strong regional economy that’s helped drive housing prices to record highs - of course, rock-bottom interest rates have made it cheaper to borrow and obtain mortgages.

All of this is helping driving up rents across every segment of the real-estate market - particularly in trendy urban areas like LA, San Francisco and Seattle.

According to the Associated Press, the most alarming consequence of the West Coast homeless explosion is a deadly hepatitis A outbreak that has afflicted Los Angeles, Santa Cruz and San Diego, the popular tourist destination in a county where more than 5,600 people now live on the streets or in their cars. The disease is spread through a liver-damaging virus that lives in feces.

Homeless populations in California, Oregon and Washington grew by 14% over the past two years, meanwhile the segment of that population considered unsheltered climbed 23% to 108,000. That is in part due a shortage of affordable housing. The unsheltered population in Seattle, the city that’s home to Amazon.com, grew by 44% over two years to nearly 5,500.

The homeless service area that includes most of Los Angeles County, the epicenter of the crisis, saw its total homeless count top 55,000 people, up by more than 13,000 from 2016. Of these, four out of every five are considered unsheltered, meaning tens of thousands of people have no place to sleep other than the streets or parks.

By comparison, while New York City’s homeless population grew to more than 76,000, only about 5 percent are considered unsheltered thanks to a system that can get people a cot under a roof immediately. In the West Coast states, the surge in homelessness has become part of the fabric of daily life.

For many business owners on the west coast – particularly in areas near downtown LA where the infamous Skid Row is home to thousands of homeless people – the burgeoning population of people living in the open air routinely intrudes on daily life and business.

The Monty, a bar in the Westlake neighborhood near downtown Los Angeles, usually doesn’t open until 8 p.m. Partner and general manager Corey Allen said that’s because a nearby shelter requires people staying there to be in the building by 7. Waiting until after that to open means the streets outside are calmer.

 

Allen said the homeless have come into his bar to bathe in the restroom wash basins, and employees have developed a strategy for stopping people from coming in to panhandle among customers.

 

Seventy-eight-year-old Theodore Neubauer sees the other side of it. Neubauer says he served in Vietnam but now lives in a tent in downtown Los Angeles. He is surrounded by thriving business and entertainment districts, and new apartments that are attracting scores of young people to the heart of the nation’s second most populous city.

 

“Well, there’s a million-dollar view,” he said.

 

Helping those like Neubauer is a top policy priority and political issue in Los Angeles.

One of the most interesting characteristics of the spike in homelessness is the concentration of homeless populations in places like LA. If one were to exclude the nation’s second largest city from the data, the national homelessness rate would’ve dropped 1.5%.

Of course, it makes sense that homeless people would gravitate towards cities on the west coast where services for the indigent are plentiful and the risk of dying from exposure is significantly reduced.

However, in cities like Sacramento, where rising housing costs are forcing students at Sacramento State to give up their apartments in sleep in the 24-hour study lounge. Sacramento and Alameda County each saw increases of more than 1,000 homeless individuals over the past year.

Last year, voters in the city and Los Angeles County passed a pair of tax-boosting ballot initiatives to raise an expected $4.7 billion over the next decade for affordable housing and services for the homeless.

HUD Secretary Ben Carson praised the region for dealing with the issue and not relying solely on the federal government, but LA mayor Eric Garcetti responded that insufficient federal funding for affordable housing was one of the drivers of the crisis.

“We need to move a little bit away from the concept that only the government can solve the problem,” Carson said.

 

But Mayor Eric Garcetti said that insufficient federal funding for affordable housing and anti-homelessness programs are part of the reason for the city’s current crisis.

 

“Los Angeles’ homelessness crisis was not created in a vacuum, and it cannot be solved by L.A. alone,” Garcetti said in a statement.

Meanwhile, areas that recorded a decline in homelessness, according to the survey, include Atlanta, Philadelphia, Miami, the Denver area and Hawaii, which declared a statewide homelessness emergency in 2015.

Silicon Valley’s ‘Working Homeless’ Shows How Hard Life Is In “Democrat’s Paradise”

Silicon Valley is the home to tech giants like Facebook, Apple, and Google. It’s also home to a surging working homeless population who live in dilapidated RV’s, tents, and their own cars, all thanks to the policies Democrats love to implement.

The surging number of those working in Silicon Valley and still unable to afford adequate housing should be a warning about big government, but it sure doesn’t seem like anyone is taking notice as their taxes continue to rise. As governments creep toward socialism though, poverty becomes the norm, not the exception. Silicon Valley has the highest median income in the nation. But a soaring tax burden and expensive regulations have caused housing prices to increase which has also caused homelessness to surge.

More than 10,000 people were living without shelter across San Jose and Santa Clara Counties on any given night in 2016, though that figure is probably low. Thanks to big government, the cost of living is not low. An influx of tech workers along with decades of under-building (thanks again to the regulations of big government) has created a historic homelessness in the Bay Area.

The governments in California continue to attempt to control deadly Hepatitis A outbreaks caused by a booming homeless population and usually do so by taking even more from those who actually work. The cycle will continue: socialists governments will put a cheap band-aid on the gaping wound they created themselves.

Rather than freeing poor people from dependence on benefactors and bosses, they merely transfer the dependence to the state, leaving the least politically connected people at the mercy of the political process. – FEE

The one thing government has are programs to help those in poverty. But those have proven ineffective. And the one thing that will work is the very thing government refuses to do: Climb off the backs of those they pretend they want to help.

Progressives routinely deplore the “affordable housing crisis” in American cities. But it is the very laws that Progressives favor—land-use policies, zoning codes, and building codes—that ratchet up housing costs, stand in the way of alternative housing options, and confine poor people to ghetto neighborhoods. Historically, when they have been free to do so, poor people have happily disregarded the ideals of political humanitarians and found their own ways to cut housing costs, even in bustling cities with tight housing markets.  – FEE

Imagine just how much more money the working poor would have if the big government in California wasn’t stealing over half their income to implement the very rules and laws that continue to make “scraping by” even more expensive.

Silicone Valley’s ‘Working Homeless’ Shows How Hard Life Is In “Democrat’s Paradise”

Silicone Valley is the home to tech giants like Facebook, Apple, and Google. It’s also home to a surging working homeless population who live in dilapidated RV’s, tents, and their own cars, all thanks to the policies Democrats love to implement.

The surging number of those working in Silicone Valley and still unable to afford adequate housing should be a warning about big government, but it sure doesn’t seem like anyone is taking notice as their taxes continue to rise. As governments creep toward socialism though, poverty becomes the norm, not the exception. Silicon Valley has the highest median income in the nation. But a soaring tax burden and expensive regulations have caused housing prices to increase which has also caused homelessness to surge.

More than 10,000 people were living without shelter across San Jose and Santa Clara Counties on any given night in 2016, though that figure is probably low. Thanks to big government, the cost of living is not low. An influx of tech workers along with decades of under-building (thanks again to the regulations of big government) has created a historic homelessness in the Bay Area.

The governments in California continue to attempt to control deadly Hepatitis A outbreaks caused by a booming homeless population and usually do so by taking even more from those who actually work. The cycle will continue: socialists governments will put a cheap band-aid on the gaping wound they created themselves.

Rather than freeing poor people from dependence on benefactors and bosses, they merely transfer the dependence to the state, leaving the least politically connected people at the mercy of the political process. – FEE

The one thing government has are programs to help those in poverty. But those have proven ineffective. And the one thing that will work is the very thing government refuses to do: Climb off the backs of those they pretend they want to help.

Progressives routinely deplore the “affordable housing crisis” in American cities. But it is the very laws that Progressives favor—land-use policies, zoning codes, and building codes—that ratchet up housing costs, stand in the way of alternative housing options, and confine poor people to ghetto neighborhoods. Historically, when they have been free to do so, poor people have happily disregarded the ideals of political humanitarians and found their own ways to cut housing costs, even in bustling cities with tight housing markets.  – FEE

Imagine just how much more money the working poor would have if the big government in California wasn’t stealing over half their income to implement the very rules and laws that continue to make “scraping by” even more expensive.

World"s First Vending-Machine For The Homeless To Be Unveiled In UK In December; LA, NYC Next Year

This is a first, a new charity in the UK called Action Hunger plans to install a vending machine for the homeless in December. The organization describes itself as a charity with a “new approach to combating homelessness.” The initial plan will be installing a machine in the town of Nottingham in the December time-period, then a second machine in Manchester sometime early 2018. If all goes well, Action Hunger plans to do a full release across the UK in attempt to alleviate poverty and hardships– something the government is having trouble in doing.

Action Hunger is working with Tesco and other partners to stock the machines with water, fresh fruit, energy bars, crisps, chocolate, and sandwiches, as well as socks, sanitary towels, antibacterial lotion, toothbrush and toothpaste combination packs, and books. A majority of the food will be provided by a localized network of regional food vendors who will donate excessive food waste.

The charity has partnered with The Friary, an outreached centre in the city, to oversee the people’s access to the vending machines. The machines will operate 24-hours a day accessed by a special card given out by the Friary and can service up to 100 homeless people per day. Key cards are programmed to permit up to three items per day, which offers a low-cost automated solution in dealing with the poor.

Action Hunger explains how the process works: 

According to the Independent, homelessness has increased 34% per cent since the Conservatives came to power in 2010, partly due to benefit cuts and welfare changes. A new study reveals that 300,000 people in Britain are now homeless, with the crisis growing as much as 13 per cent last year alone.

Number of rough sleepers across England on a given night

Number of homelessness applications made to local authorities

Action Hunger is targeting Nottingham and Manchester, two areas where homelessness is out of control.

Across England, housing market affordability is once again above 2006 to 2008 levels— signaling that house prices are once more outpacing income.

Besides the exploding homelessness situation in the UK, there is an even larger market in the United States, where Action Hunger will be installing the vending machines next year in Seattle, New York, and LA.

In August, we reported 1 in 7 New York City Public-School students is homeless. On top of that, NYC shelter officials have admitted a record number of homeless to shelters each night.

In a preview of things to come, automation in the form of vending machines seems to be the short term solution in dealing with the homeless in the UK. The next step for Action Hunger appears to be a multi-city rollout in the United States targeting a much larger homeless population as the middle class deteriorates.

For our American audience, an automated vending machine for the homeless is coming to a town near you. The dying middle class will no longer be able to shop at the Dollar Tree nor Walmart, as they will resort to automated vending machines. The future is bleak.

As America Gave Thanks, Homelessness Set New Records In Major Cities All Over The Nation

Authored by Michael Snyder via The Economic Collapse blog,

If the economy is doing just fine, then why is homelessness at levels not seen “since the Great Depression” in major cities all over the country? 

If the U.S. economy was actually in good shape, we would expect that the number of people that are homeless would be going down or at least stabilizing.  Instead, we have a growing national crisis on our hands.  In fact, within the past two years “at least 10 cities or municipal regions in California, Oregon and Washington” have declared a state of emergency because the number of homeless is growing so rapidly.

Things are particularly bad in southern California, and this year the Midnight Mission will literally be feeding a small army of people that have nowhere to sleep at night…

Thanksgiving meals will be served to thousands of homeless and near-homeless individuals today on Skid Row and in Pasadena and Canoga Park amid calls for donations and volunteers for the rest of the year.

 

The Midnight Mission will serve Thanksgiving brunch to nearly 2,500 homeless and near-homeless men, women and children, according to Georgia Berkovich, its director of public affairs.

Overall, the Midnight Mission serves more than a million meals a year, and Berkovich says that homelessness hasn’t been this bad in southern California “since the Great Depression”…

Berkovich said the group has been serving nearly 1 million meals a year each year since 2013.

 

“We haven’t seen numbers like this since the Great Depression,” she said.

And of course the official numbers confirm what Berkovich is claiming.  According to an article published earlier this year, the number of homeless people living in Los Angeles County has never been higher…

The number of homeless people in Los Angeles has jumped to a new record, as city officials grapple with a humanitarian crisis of proportions remarkable for a modern American metropolis.

 

Municipal leaders said that a recent count over several nights found 55,188 homeless people living in a survey region comprising most of Los Angeles County, up more than 25% from last year.

If the California economy is truly doing well, then why is this happening?

We see the same thing happening when we look at the east coast.  Just check out these numbers from New York City…

In recent years the number of homeless people has grown. Whereas rents increased by 18% between 2005 and 2015, incomes rose by 5%. When Rudy Giuliani entered City Hall in 1994, 24,000 people lived in shelters. About 31,000 lived in them when Mike Bloomberg became mayor in 2002. When Bill de Blasio entered City Hall in 2014, 51,500 did. The number of homeless people now in shelters is around 63,000.

For New York, this is the highest that the homeless population has been since the Great Depression, and city leaders are trying to come up with a solution.

Meanwhile, things are so bad in Seattle that “400 unauthorized tent camps” have popped up…

Housing prices are soaring here thanks to the tech industry, but the boom comes with a consequence: A surge in homelessness marked by 400 unauthorized tent camps in parks, under bridges, on freeway medians and along busy sidewalks. The liberal city is trying to figure out what to do.

Are you noticing a theme?

Homelessness is at epidemic levels all over the U.S., and this crisis is getting worse with each passing day.  Some communities are trying to care for their growing homeless populations, but others are simply trying to force them to go somewhere else.  They are doing this by essentially making it illegal to be homeless.  In some cities it is now a crime to engage in “public camping”, to “block a walkway” or to create any sort of “temporary structure for human habitation”.  These laws specifically target the homeless, and they are very cruel.

Many of us tend to picture the homeless as mostly lazy older men that don’t want to work and that instead want to drink or do drugs all day.

But the truth is that women and children make up a significant percentage of the homeless.

In fact, the number of homeless children in our country has increased by about 60 percent since the end of the last recession.

And there are thousands upon thousands of military veterans that are homeless.  For example, a 34-year-old man named Johnny that served in the Marine Corps recently used his last 20 dollars to buy fuel for a woman that had run out of gas and was stranded along I-95 in Miami…

Pulled over on the side of I-95, McClure, 27, was approached by a homeless man named Johnny. She was apprehensive at first, but Johnny told her to get back into her car and to lock the doors while he walked to get her help. He went to a nearby gas station, used his last $20 fill a can and brought it back to fill up her car.

 

Grateful, but without a dollar to repay him, McClure promised she would come back with something.

 

In the weeks since, she’s returned to the spot along I-95 where Johnny stays with cash, snacks and Wawa gift cards. Each time she’s stopped by with her boyfriend, Mark D’Amico, they’ve learned a bit more about Johnny’s story, and become humbled by his gratitude.

Deciding that they wanted to do even more for Johnny, they started a GoFundMe page for him and have since raised approximately $250,000.

So it looks like there is going to be a happy ending to Johnny’s story, but the truth is that more people are falling into homelessness with each passing day.

If things are this bad now, how much worse will they become as the economy really starts slowing down?  Already, we have shattered the all-time yearly record for retail store closings, and we still have more than a month to go.  The following is from a CNN article entitled “Is This The Last Black Friday?”…

A record number of store closures - 6,735 - have already been announced this year. That’s more than triple the tally for 2016, according to Fung Global Retail and Technology, a retail think tank.

 

And there have been 620 bankruptcies in the sector so far this year, according to BankruptcyData.com, up 31% from the same period last year. Prominent names such as Toys R Us, Gymboree, Payless Shoes and RadioShack have all filed this year, and Sears Holdings (SHLD), which owns both the iconic Sears and Kmart chains, has warned there is “substantial doubt” it can remain in business.

Sadly, analysts are projecting that the number of store closings could be as high as 9,000 next year.

Yes, there are some areas of the country that are doing well right now, but there are many others that are not.

Let us always remember to have compassion on those that are struggling, because someday we may be the ones that end up needing some help.

*  *  *

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

"Granite Islands And Backsplashes": Even Doublewide Trailers Are No Longer "Affordable"

Since the early 1900s, millions of Americans have relied on trailers as a source of no-frills, affordable housing.  In fact, roughly 22 million Americans live in trailer parks today, but the industry is hardly the stable source of affordable housing that it used to be...a lesson that 73-year-old Judy Goff of Naples, Florida recently discovered the hard way after Hurricane Irma ripped through her park and destroyed her home, along with roughly 1.8 million others.

As Bloomberg points out, when Goff went to a local LeeCorp dealer lot to replace her $46,000, 1,200 square foot trailer with something of similar size and value, what she found instead was "manufactured homes" stuffed with high-end upgrades like granite counter-tops and vaulted ceilings that rendered them too expensive for her $23,000 per year of income.

Last month, Judy Goff, a 73-year-old hardware store clerk whose double-wide in Naples, Fla., was blown to bits, pulled into a LeeCorp Homes Inc. sales lot and wandered through models with kitchen islands and vaulted ceilings. In the salesman’s office, she got the total price, including a carport, taxes, and removal of her destroyed trailer: $140,000. “I don’t have that kind of money,” said Goff as she stood amid the wreckage of her old home, whose walls and ceiling were stripped away, leaving her leather furniture and a lifetime of possessions to bake in the sun. “That was all I had.”

 

Goff—who just wants to replace the wrecked 1,200-square-foot trailer that she bought 17 years ago for $46,000, including the cost of land—says she feels boxed in. Her mobile-home community won’t allow single-wide homes or older used models as replacements. And every home must have a carport. She’s willing to give up such upgrades as the higher-end countertops, but that probably won’t be enough. Between her Social Security check and income from her job at Ace Hardware Corp., she earns only about $23,000 a year. “I just want a home that’s equal to what I had,” she says. “My home was a beauty.”

 

“I get that higher-end countertops and kitchen islands are where the better margins are, but that’s also going to put homes out of reach for a lot of buyers,” says Doug Ryan, director of affordable homeownership at the Washington nonprofit Prosperity Now. “The storm is revealing a whole lot of problems in the low-cost housing market.”

Meanwhile, as we note frequently, while the cost of manufactured homes has surged, the pay for the bottom fifth of American wage earners has been somewhat stagnant for nearly two decades now. Even after a modest uptick recently, the bottom 20% of households have seen their income fall 9% since 2000, in real terms.

But, as low-income households have found it increasingly difficult to rebuild after devastating hurricanes, the surge in manufacturing home pricing has been a boon for billionaire Warren Buffett who made a big financial bet on the largest manufactured housing builder, Clayton Homes, back in 2003.

The industry, led by Warren Buffett’s Clayton Homes Inc., is peddling such pricey interior-designer touches as breakfast bars and his-and-her bathroom sinks. These extras, plus manufacturers’ increased costs for labor and materials, have pushed average prices for new double-wides up more than 20 percent in five years, putting them out of reach for many of the newly homeless.

 

Phil Lee, the 74-year-old founder of LeeCorp, has been riding a wave of retiring baby boomers who want affordable luxury. Driving a reporter in his black BMW SUV through Bayside Estates in Fort Myers Beach, where many of the fanciest homes he sells are installed, Lee points out units with pitched roofs that look almost indistinguishable from conventional homes, facing canals with boats tied outside. Their owners, former dentists, doctors, executives, and others, spent upwards of $150,000 to buy aging units just to clear the way for something more luxurious. On a palm-lined street flanked by ranks of 1970s-era trailers, Lee sees profit. “There’s no end to replacing these homes,” he says. “You get a hurricane in there and it really accelerates things.”

 

Terms such as “mobile home” or “trailer” are now verboten in an industry striving to break free of its downscale origins. Buffett’s Clayton Homes, which produces almost half of all new manufactured housing in the U.S. and competes with such companies as Cavco Industries Inc. and Champion Home Builders Inc., still builds lower-priced units, but there’s barely a sign of them on its website, which is mostly devoted to high-price models. The 2,000-square-foot Bordeaux features a separate tub and shower, a computer station, and a mud room, with prices starting at $121,000 and ranging as high as $238,000, not including delivery and installation costs. Clayton declined to comment.

Of course, while mobile homes are becoming increasingly cost-prohibitive for low-income families in Florida and Texas, Silicon Valley"s future tech billionaires can"t seem to get enough of them.

Unreal. Housing so expensive in techland, RVs line the streets as people choose to live in them instead. pic.twitter.com/ACW5dZMz6N

— M. Caruso-Cabrera (@MCaruso_Cabrera) November 21, 2017

Why Cities All Across America Are Suddenly Buying Up Trailer Parks

Much like the historic run that nearly resulted in the collapse of the global financial system in 2009, home prices in the U.S. are once again looking more like an Amazon or Facebook stock price chart than a stable store of value that should probably grow roughly inline with overall inflation. 

And while these price gains are great news for the private equity firms that scooped up foreclosed homes after the last housing crisis, they"re once again making it nearly impossible for the average American family to find affordable housing. 

As such, as the Pew Charitable Trusts points out, municipalities all across the country are suddenly scooping up trailer parks in an effort to prevent them from being converted to the next McMansion track-housing project and maintain some affordable housing options.

Here in the heart of one of Colorado’s most expensive cities, Isabel Sanchez bought a mobile home seven years ago for just $6,000. Her four-bedroom bungalow now sits on a lot she rents for $355 a month.

 

The mobile home park Sanchez and her family live in offers a glimpse of Boulder’s hippie past. Small houses and trailers, many dating to the 1960s and ’70s, sit close together on tree-lined streets. “I love the space, I love the location, I love the community here,” Sanchez, 55, said recently, relaxing in a blue armchair in her spotless living room.

 

Affordable neighborhoods like these have become hard to find in Boulder and cities across the country where home prices are soaring. In some metro areas, rising prices are prompting park owners to sell their land to developers, affordable housing advocates say. “When the mortgage crisis came about it sort of slowed down, and now it’s heating up again,” said Carolyn Carter, deputy director of the National Consumer Law Center.

 

So Boulder and a handful of other localities, desperate to hang on to homes middle- and working-class people can afford, have stepped in to buy parks, fix them up, and transfer ownership to residents or to a nonprofit on condition that rents be kept low.

 

Portland, Oregon’s housing authority financed a deal last year that saved a mobile home park from being sold to a developer. Pitkin County, Colorado, is buying a park it intends to set aside for people who work in the area. And Boulder bought a park this summer, with the twin goals of improving its infrastructure and maintaining affordable housing.

 

Affordable housing advocates say that the best way to preserve mobile home parks is to turn them into co-operatives owned by residents. But in Boulder, land is so valuable — and parks need so many infrastructure upgrades — that it wouldn’t be possible for low-income residents to finance the purchase alone.  

As Pew notes, roughly 8 million Americans live in trailer parks around the country and when their land is sold off for the next housing development they have no choice but to scramble to find new housing.

About 20 million Americans live in manufactured homes — so called because they’re built in a factory, rather than on site — and about two-fifths of those can be found in mobile home parks, mostly in suburbs and exurbs.

 

Mobile homes are an important source of low-income housing. But homeownership can be precarious for people who live in mobile home parks. Because they don’t own the land beneath their houses or trailers, they have to move if the park closes down.

 

And many mobile homes aren’t all that mobile. Sanchez, who works at a nonprofit in Denver, says she could probably move her house if she had to because it was built recently. Her daughter’s house across the street may be a different story. It has sat there for over 40 years, like most of the homes in the park.

 

The closure of a mobile home park can create a crisis for residents and for the city or town they live in as dozens of displaced people scramble to find new housing, says Esther Sullivan, a sociologist at the University of Colorado Denver who has studied mobile home parks in Texas and Florida. In her research, she found that city council members who agree to rezone a park often argue that park residents can move into low-income housing elsewhere. But that’s not always the case, she said.

Meanwhile, national nonprofits have sprung up to help residents form co-ops and finance purchases.

One way to preserve mobile home parks is to give the people who live in them a chance to buy the park themselves at a fair market rate, says Carter of the National Consumer Law Center. A national nonprofit called ROC USA will, with the permission of the park owner, help residents form a co-operative and finance a purchase. ROC USA has sponsored some 200 resident-owned communities in the United States.

 

At least 19 states have laws on the books that help residents buy a park, Carter says. Some states require park owners to give residents months of advance notice before a park is sold, to notify residents if they request a zoning change for the property, or to allow residents to organize into homeowners associations. Other states will free up money when a park closes to help residents pay their relocation costs or require park owners to chip in.

Of course, we could also just reduce artificial demand for McMansions by reversing a decade of misinformed Fed policies...but that might result in the bursting of yet another nasty little bubble...

San Diego's Deadly Hepatitis A Outbreak Turns "Statewide Epidemic" As "Outbreak Could Last Years"

A few weeks ago we highlighted the staggering outbreak of Hepatitis A in San Diego that had infected 400 people and killed more than a dozen.  The outbreak was first identified in early March, according to the county, and declared a public health emergency in September.

But, as the LA Times points out, the hepatitis A outbreak that started in San Diego is now on the verge of reaching statewide epidemic status, as cases have spread through homeless tent cities all the way north to Sacramento.

California’s outbreak of hepatitis A, already the nation’s second largest in the last 20 years, could continue for many months, even years, health officials said Thursday.

At least 569 people have been infected and 17 have died of the virus since November in San Diego, Santa Cruz and Los Angeles counties, where local outbreaks have been declared.

Dr. Monique Foster, a medical epidemiologist with the Division of Viral Hepatitis at the U.S. Centers for Disease Control and Prevention, told reporters Thursday that California’s outbreak could linger even with the right prevention efforts.

“It’s not unusual for them to last quite some time — usually over a year, one to two years,” Foster said.

Hepatitis A is commonly transmitted through contaminated food. The only outbreak in the last 20 years bigger than California’s occurred in Pennsylvania in 2003, when more than 900 people were infected after eating contaminated green onions at a restaurant.

California’s outbreak, however, is spreading from person to person, mostly among the homeless community.

The virus is transmitted from feces to mouth, so unsanitary conditions make it more likely to spread. The city of San Diego has installed dozens of handwashing stations and begun cleaning streets with bleach-spiked water in recent weeks.

Meanwhile, the outbreak has made its way to Santa Cruz and L.A. counties, where 70 and 12 people have already been diagnosed, respectively, as public health officials warn that the worst is likely far from over.

San Diego County declared a public health emergency in September because of its hepatitis A outbreak.

Since November, 481 people there have fallen ill, including 17 who died, according to Dr. Eric McDonald with the county’s health department. An additional 57 cases are under investigation, he said.

Officials from both counties say they’ve vaccinated thousands of homeless people and will continue to do so.

New cases linked to the outbreak might not appear for weeks, because it can take up to 50 days for an infected person to show symptoms, said Santa Cruz public health manager Jessica Randolph.

“I don’t think the worst is over,” Randolph said.

Of course, as we pointed out earlier this year (see: Shocking Video Footage Of Sprawling California Tent City), sprawling tent cities have been popping up all over California for years and are called home by 1,000s of residents in even the most posh cities from Newport to Santa Cruz.  All of which has prompted a wave of vaccinations and a "review of sanitation protocols for homeless encampments"...which we"re sure will be followed very rigorously by residents.

In Orange County, which has had two hepatitis A cases linked to the outbreak, public health workers have given out 492 vaccines, mostly to homeless people, officials said. County nurses have also been visiting shelters and parks to vaccinate people.

Some officials, including in Riverside and Sacramento counties, also said they were reviewing their sanitation protocols for homeless encampments. An L.A. councilman recently called for more toilets in neighborhoods such as skid row and Venice in light of the local hepatitis cases.

In Oakland, city workers, represented by SEIU Local 1021, sent a letter to City Hall last month saying they feared a hepatitis A outbreak in the region’s homeless community. So far, there haven’t been any cases in Oakland or the rest of Alameda County, but city safety steward Brian Clay said he believed the city has allowed unsanitary conditions in homeless encampments.

“There’s syringes, there’s human feces, there are dead animals, rats alive, and dead rats … pee bottles, five-gallon buckets used as toilets,” Clay said. “We’re definitely concerned about this added threat of hepatitis A.”

As Breitbart points out, California"s tent cities are the direct result of "proactive" legislation that forbids police from dispersing homeless people living in tent cities between the hours of 9pm and 5:30am.

California homeless advocates have been successful across the state in forcing cities to accept the homeless living in large tent communities on public property. The advocates refer to anti-homeless ordinances as the modern-day equivalent to post-slavery Jim Crow and Depression era anti-Okie laws that allowed police to disperse people deemed “undesirable” after dark.

The City of San Diego was forced to sign the Spencer Settlement in 2006, which forbids its Police Department from enforcing the city’s “Illegal Lodging Enforcement Guidelines” between the hours of 9 pm to 5:30 am.

California, with 115,738 homeless, now accounts for about 21 percent of America’s total homeless population. Due to legal settlements against vagrancy laws, about 72.3 percent of California’s homeless are unsheltered, usually living in tent cities.

If you like your socialist utopia, you can keep your socialist utopia.

Housing Bubble Symmetry: Look Out Below

By Charles Hugh Smith

Housing markets are one itsy-bitsy recession away from a collapse in domestic and foreign demand by marginal buyers.

There are two attractive delusions that are ever-present in financial markets: One is this time it’s different, because of unique conditions that have never ever manifested before in the history of the world, and the second is there are no cycles, they are illusions created by cherry-picked data; furthermore, markets are now completely controlled by central banks so cycles have vanished.

While it’s easy to see why these delusions are attractive, let’s take a look at a widely used measure of the U.S. housing market, the Case-Shiller Index:

If we look at this chart with fresh eyes, a few things pop out:

1. The U.S. housing market had a this time it’s different experience in the 2000s, as an unprecedented housing bubble inflated, pushing housing far above the trendline of the Case-Shiller National Home Price Index.

2. It turned out this time wasn’t different as this extreme of over-valuation collapsed.

3. For a variety of reasons (massive central bank and state intervention, the socialization of the mortgage market via federally guaranteed mortgages, historically low mortgage rates, massive purchases of mortgage backed securities by the Federal Reserve, etc.), the collapse in prices did not return to the trendline.

4. There is a remarkable time symmetry in each phase of expansion and collapse; each phase took roughly the same period of time to travel from trough to peak and peak to trough.

5. The Index has now exceeded the previous bubble peak, suggesting this time it’s different once again dominates the zeitgeist.

6. Those denying the existence of cycles have difficulty adequately explain away the classic cyclical nature of the 2000-2008 bubble rise and its collapse, and the subsequent expansion of housing prices in a near-perfect mirror-image of the first housing bubble’s steep ascent.

Claiming that this painfully obvious time symmetry is mere randomness/coincidence is not an explanation.

7. This time symmetry suggests that the current housing bubble is close to its zenith and will likely collapse over a time frame similar to Housing Bubble #1.

The basic arguments for ever-higher housing prices forever and ever are:

A. central banks completely control all markets, including housing, and they will never let the housing market decline ever again.

B. Foreign buyers paying cash (even if the “cash” was borrowed in Asia) will continue flooding into North America, elevating markets for the the foreseeable future.

Toronto Home Price Bubble Bursts Into Bear Market

Authored by Wolf Richter via WolfStreet.com,

With surprise rate hike, Bank of Canada turns against housing market...

Home sales in the Greater Toronto Area, the largest housing market in Canada, plunged 34.8% in August compared to a year ago, to 6,357 homes, with sales of detached homes and semi-detached homes getting eviscerated:

Sales by type:

• Detached houses -41.6%


• Semi-detached houses -37.3%


• Townhouses -27.5%:


• Condos -28.0%.

Even as total sales plunged, the number of active listings of homes for sale soared 65% year-over-year to 16,419, with 11,523 new listings added in August, according to the Toronto Real Estate Board (TREB).

“The relationship between sales [plunging] and listings in the marketplace today [soaring] suggests a balanced market,” the report explained, adding hopefully:

“If current conditions are sustained over the coming months, we would expect to see year-over-year price growth normalize slightly above the rate of inflation. However, if some buyers move from the sidelines back into the marketplace, as TREB consumer research suggests may happen, an acceleration in price growth could result if listings remain at current levels.”

And the average price of all homes, at C$732,292 in August, plunged 20.5% from the crazy peak in April (C$920,761). By this measure, it has now entered a bear market.

The average price in April had shot up 30% year-over-year.

To cool this nutty business, the Ontario government introduced a laundry list of measures on April 20. It included most prominently a 15% transfer tax on nonresident foreign speculators. That appears to have done the trick.

Given the enormous price gains in recent years, the market remains hyper-inflated, and the four-month downturn into a bear market hasn’t even brought prices back to the year-ago level, with the average price for all types of housing up 3%, and the condo price up 21.4% year-over-year.

To cool a similarly nutty housing bubble in Vancouver, the government of British Columbia had passed a year ago similar legislation with a 15% nonresident foreign speculator tax. But worried about an outright implosion of the bubble, it has since been subsidizing with taxpayer money down-payments aimed at first-time buyers and condos, which has inflated the condo bubble and condo speculation to new heights.

Politicians – they’re desperately dependent on extracting property taxes from homeowners – don’t want the world’s most majestic housing bubble to implode. They just want it to remain stable so that taxes can be extracted from willing homeowners that have gotten rich off years of house-price inflation. But for now, the Ontario government is letting the market ride.

The TREB report said that the sharp drop in average prices “points to fewer high-end home sales this year compared to last.” So are speculators with the most money abandoning the market?

Even the Bank of Canada has been warning home buyers – particularly speculators – all year long about big potential losses. Then in July, it raised its target for the overnight rate by 0.25 percentage points. Another rate hike was expected in December, to match the Fed’s presumed rate hike.

But today, in a surprise move, it raised rates again by 0.25 percentage points, to 1% – and there are now expectations that it might raise its target rate a third time later this year. In response, the loonie jumped 1.3% against the US dollar this morning.

These rate hikes “would just further dampen” the housing market, explained Bank of Montreal chief economist Doug Porter, adding that the surprise increase so soon after July’s rate hike “accentuates” the Bank of Canada’s urgency to raise rates.

“So I wouldn’t brush it off – I think that will put a bit more upward pressure on some of the medium and longer-term mortgage rates as well, and of course the variable rates will move almost instantaneously,” he said.

Variable-rate mortgages account for about 30% of all mortgages in Canada. So these rates ticked up after the July hike; they will after this hike; and if there’s another hike later this year, they’ll tick up again. A 0.75 percentage points increase in the interest rate on a C$800,000 mortgage would raise the annual interest costs by C$6,000.

Homeowners with variable-rate mortgages will now have to come up with more money to pay for their homes. And potential homebuyers are looking at steeper costs – something they will likely keep in mind, now that easy price gains may no longer be so easy, and that the Bank of Canada, rather than just warning about it, is actively working to deflate the housing bubble.

And the housing bubble in the US? Read… The US Cities with the Biggest Housing Bubbles

Renters Struggle As California Home Prices Climb Faster Than Official Inflation Rate

By Jeff Paul

The US government likes to pretend that the rising cost of living is under control. People in Southern California know better. According to a new report in the Los Angeles Times, median house prices in Southern California have nearly doubled in the last five years.

LA Times reports:

In many corners of Southern California, home prices have hit record highs. And they keep going up.

In Los Angeles County, the median price in June jumped 7.4% from a year earlier to $569,000, surpassing the previous record set in May. In Orange County, the median was up 6.1% from 2016 and tied a record reached the previous month at $695,000.

Across the six-county region, the median price — the point where half the homes sold for more and half for less — rose 7.5% from a year earlier and is now just 1% off of its all-time high of $505,000 reached in 2007, according to a report out Tuesday from CoreLogic.

The price increase was even greater than the 7.1% rise recorded in May, and some agents say there are no signs of a slowdown in the Southern California market.

One of Twitter’s funniest economic sleuths, Rudy Havenstein, points out the obvious problem:

In case you’re confused, Rudy is referencing that the US government and its central banking partners desire a 2% inflation rate. Government measures the prices consumers pay for a basket of goods and services to determine the official inflation rate called the Consumer Price Index (CPI). However, the “core” CPI doesn’t include vital things like food and energy.

The chart below from the Bureau of Labor Statistics illustrates how much more dramatic the cost of living rate moves when food and energy are added:

Market optimists tend to quote the core CPI number because it’s less dramatic, but it’s not as accurate as the “headline” CPI with food and energy included. But the core CPI claims to be a good measure of housing costs. Until 1983, the measure of homeowner cost was based largely on house prices. Today, they use some voodoo math since a home is considered an investment and a living expense. Simply put, it attempts to account for owner-occupied homes which may be going up in value, but the monthly cost remains stable. Whereas rents in the same market will rise due to the increased value of homes.

A more reliable measure of home prices, the Case-Shiller Composite Home Price Index, was also released this week. It showed a nationwide increase of 5.6%, closer to Southern California’s rate than the CPI.

The Case-Shiller Index chart below looks very similar to the LA Times chart showing the boom in home prices beginning in 2012.

Home prices alone don’t tell the whole story. Renters are struggling the most. According to a recent report in the Orange County Register, the average rent for a house in Orange County is $3,114 per month and $2,548 for a home in Los Angeles County. The median household income in LA County is around $56,000, before taxes. So rent eats about 50-60% of wages. And Southern California is a microcosm of what is happening in many other cities in America.

The LA Times correctly identifies the market forces causing the price increases: “growing economy, rock-bottom mortgage rates and a shortage of homes on the market.”  And, of course, the LA Times shepherds government action to stop the surge in home values.

Government officials say they are trying to take steps to address the problem of affordability.

In Los Angeles, Mayor Eric Garcetti is advocating for a fee on new development to raise money for below-market housing — a policy known as a “linkage fee” and used in cities such as San Francisco, San Diego and Oakland.

And in Sacramento, Gov. Jerry Brown and legislative leaders have said they will put housing at the top of their agenda when they return in August from a monthlong break.

Legislators have proposed a package of bills aimed at raising money for subsidized housing and making it easier for developers to build all kinds of housing, which often faces pushback from residents concerned over traffic and neighborhood character.

Some cities in Southern California have already made some absurd laws trying to reduce cost of homes like banning Airbnb-type short-term rentals. Watch the video below where Activist Post’s Vin Armani explains this wrongheaded approach:

Markets tend to correct themselves without government interference. People also adapt. It’s one reason the co-living trend is exploding. However, sooner or later not enough people can afford house prices and a correction will begin. For instance, some people will move away and new housing units will be built to accommodate supply and demand.

Take a look as Case-Shiller’s HPI chart below from the boom-bust period of 2002 through 2008. You can clearly see the 2007 correction begin to have its effect.

After loose lending practices, low mortgage rates, and shady Wall Street re-packaging of housing debt enabled the boom period and inevitable bust, the downward trend continued until about 2012 as previously indicated.

Today rates are even lower. Lenders are getting creative again because Millennials don’t qualify due to high student debt and low wages. And Wall Street is as corrupt and greedy as ever. Combine that with the bloated municipalities in desirable areas making it expensive or impossible to get new building permits, and home prices may continue rising at this rate for a couple more years.

Jeff Paul writes for Activist Post and Counter Markets newsletter. Like us on Facebook, subscribe on YouTube, follow on Twitter and at Steemit.

This article is Creative Commons. You may republish in full with attribution and link to this post.