Before getting back to the top economic news of the day – the S&P Case Shiller home price data for March that requires more than just a cursory review this month after it confirmed a “double-dip” in U.S. home prices that most already accepted as fact anyway – two other related housing stories are worth a closer look, both of which point to more difficulties for Anglo Saxon economies and the central banks that make policy for them.
First, in this story from The Guardian in the U.K., comes a term that is new to me – “Generation Rent” – and it laments the fading appeal of home ownership, that is, now that no one is getting rich on real estate anymore.
Two-thirds of potential first-time buyers have no realistic prospect of owning their own home in the next five years and lack the long-term saving mentality they need to get onto the housing ladder, according to a report on home ownership by one of the UK’s biggest mortgage lenders.
Owning a home has been a priority for most Britons since the 1950s when living standards began to rise, but the Halifax says that the high cost of property, strict lending rules and unwillingness of non-homeowners to save a deposit have fundamentally changed the attitudes of younger people towards home ownership.
In a survey of 8,000 people aged between 20 and 45, only 5% of those described by the Halifax as “Generation Rent” (those with no realistic prospect of getting on the housing ladder) are making spending sacrifices to save towards their first home. The remaining 95% have no spare cash, no interest in saving or are trying but failing to save.
Of course, many decades ago, nearly the entire world rented – if memory serves, even after the 1925 Florida housing bubble, the home ownership rate in the U.S. was still well below 50 percent during the Great Depression – but that’s a discussion for another day.