Apartment Vacancies Cause New Nightmare in U.S. Housing Collapse

On the same day that CNN published a piece showing that U.S. banks are only pretending to help U.S. homeowners avoid foreclosure, it also published a story showing that U.S. apartment vacancies just hit a 20-year high, and are on pace to soon hit an all-time record.

Here's a rhetorical question for readers: what happens when apartment vacancy rates skyrocket? That's right, rental prices collapse. And when cash-strapped Americans can suddenly rent accommodations at very reasonable prices – and with a great selection – what happens to sales of homes? That's right, they go down.

With more than 20 million vacant homes in the U.S., with banks deliberately holding millions of foreclosed off the market (see “The Distressing news about Distressed U.S. properties”), with U.S. homes still significantly over-valued (in historical terms), and with U.S. home-builders building 50% more units than they are selling every month, this is just one more piece of evidence that the U.S. housing market has not even begun a bottoming process.

Combined with the vast inventory of empty homes, soaring apartment vacancies illustrate another vivid point about the housing market in the United States: there are millions more units on the market than could ever be occupied by Americans. As I have written in countless commentaries, no “bottom” in the U.S. housing market will ever be possible unless/until millions of units are bulldozed.

This process has already started. In a previous commentary, I pointed out that bankers have very quietly started leveling homes in the U.S. In Michigan, which has been devastated by this collapse perhaps worse than any other U.S. state, at least one local government is already contemplating demolishing entire districts in a deliberate attempt to shrink the town to a size which can be serviced through plunging tax revenues (see “Demolition of Abandoned U.S. Homes has already begun”).

Meanwhile, a very interesting piece on Seeking Alpha provided a compelling analysis that banks are economically better off to throw homeowners out of their homes, rather than engage in “mortgage modification”, where most of those “helped” simply end up defaulting again in less than a year. With the U.S. financial crime syndicate able to siphon as many trillions of dollars as is necessary from the U.S. Treasury to keep it (at least appearing to be) solvent, the banksters have absolutely zero incentive to help Americans.

Indeed, the CNN piece lists a litany of complaints against the banks:

"We are trying to refinance but are getting the runaround from the bank. They keep stalling, missing appointments and forgetting to send us paperwork." [After contacting her bank 27 times and faxing documentation 6 times.] “So still I wait,” complained another. “Now it has been a month since I returned all the proper paper work and have received no correspondence.”

This is just a tiny sample from the hundreds of complaints reported to CNN alone. Acorn Housing, an organization providing counseling to struggling U.S. homeowners reports that 5 months after the Obama housing “rescue” began, the banksters have refused to hire sufficient staff to handle requests for refinancing, or even fully updated their computer systems to process requests.

As I have also observed in a number of previous commentaries, there is a much more insidious reason why the U.S. financial crime syndicate wants to see as many Americans as possible thrown out of their homes. “The Bankers Manifesto of 1892” clearly shows that what is taking place today has been a bankers' dream for over a century.

“When through the process of the law, the common people have lost their homes, they will be more tractable and easily governed through the influence of the strong arm of the government...People without homes will not quarrel with their leaders.” [Who says that dreams don't come true?]

This also explains why the U.S.'s two-party dictatorship has been such an enthusiastic partner in the Eviction of America: it makes their grip on power much stronger than that of the English king they replaced.

However, for those Americans looking to escape the economic slavery which banksters and their political servants have imposed on this population, there is still a means to choose liberty: buying gold (and silver).

Antal Fekete, one of the world's foremost banking scholars, recently wrote a brilliant essay ("Fiat Money in Death Throes") on precisely how and why a “gold standard” protects people from exactly this sort of economic slavery. While re-establishing a gold standard is still several years away, converting soon-to-be-worthless U.S. dollars for gold and silver can at least ensure that the plight of individual Americans gets no worse [Note: for those unaware of this, the private bankers of the Federal Reserve have caused the U.S. dollar to lose 97% of its value, since these career-criminals were given the sole authority to protect the U.S. currency.]

For a people who have spent much of the last few decades “liberating” the populations of other nations (like Vietnam, Iraq, and Afghanistan) by destroying their countries, it is clearly time for Americans to focus on liberating themselves.

Comments

[optionsgirl:]

I'm glad for you too. I hope our Canadian neighbors enjoy prosperity for decades to come. But, I have been reading that Canadians are leveraged at 140%, while US citizens are leveraged at 170% on average. The greater the debt, the farther the fall. Wishing everyone a soft landing.


On Jul 09 09:29 AM Canadian Guy wrote:

> What a difference a border makes.
>
> In June, the greater Toronto area (seekingalpha.com/symbo...)
> which includes the city of Toronto and all the outlying suburbs,
> approximately 5 million people, set a record for the most number
> of homes sold in a month.
>
> Listings are down 30% from the boom times a year or so ago, but sales
> continue due to lower interest rates and the fact that people are
> spending less money in general, therefore have higher saveings for
> down payments when they do decide to buy a home.
>
> Compare this to the economic desolation I see when I cross the border
> to visit Buffalo and I'm glad our Canadian bankers have always been
> a bunch of tight fisted twats who refused to lend money to people
> if they couldn't prove they could repay it.

Jul 09 12:48 PM

[optionsgirl:]

Here is an article published last week about rising Canadian credit card default:
Debt tripping up Canadians


More than 500,000 at least 90 days behind on credit payments as delinquency rate rises 19%
Jul 03, 2009 04:30 AM
Comments on this story (102)
Rita Trichur
Dana Flavelle
BUSINESS REPORTERS

More than half a million Canadians have fallen behind on their various credit payments, fuelling a 19 per cent rise in the average national delinquency rate in the one-year period ending May 31, 2009, says a new report from Equifax Canada.

The credit bureau called the double-digit jump "alarming," noting the average delinquency rate for Canada hit 1.52 per cent at the end of May.

Much of the trouble stemmed from missed payments on credit card bills and for sales finance purchases of items such as furniture and electronics.

Equifax defines delinquent bills as those that are at least 90 days overdue.

Its latest snapshot on delinquencies comes just days after a Senate committee released a report urging the federal government to take more aggressive action to shield consumers and small businesses from rising interest rates and fees in the credit and debit card markets.

Finance Minister Jim Flaherty continues to review all input on credit cards and will announce his final intentions once that process is complete, a spokesperson said.

While his office gave no timeline, Pierrette Ringuette, the Liberal senator who spearheaded the study, appeared to up the ante yesterday by vowing to introduce legislation in September if the government fails to act by then.

Legislation, except money bills, can be introduced in the Senate, although most originates in the House of Commons. It was unclear what kind of support such a bill would garner in a minority Parliament.

The Senate report, released Tuesday, recommended the government create an "oversight board" and also take steps to clamp down on the rates and fees paid by consumers and merchants for the use of Visa, MasterCard and other card brands.

If Flaherty takes no action by the fall, "I'm going to be very, very disappointed," Ringuette said in a phone interview.

"The small and medium businesses of this country are not asking for a bailout," she said.

"They're only asking for fairness – just like consumers are only asking for fairness. I think it's high time that government paid attention to them."

The Equifax report, meanwhile, was the latest study to suggest that increasing numbers of Canadians are struggling to pay their bills.

Nadim Abdo, an Equifax vice-president, stressed the "sharpest increase" in delinquencies resulted from credit card and sales finance purchases, which have risen by 38 per cent and 58 per cent, respectively, since May 2008.

Rising delinquencies in those areas are troubling because consumers tend to miss payments on those unsecured credit products before they fail to pay back collateral-backed loans such as mortgages, bank loans and lines of credit, Abdo said.

While that's likely to spell higher loan losses for banks, consumers who skip payments will also suffer longer-term consequences because of tarnished credit scores.

"When economic conditions get better, whenever that is, if they want to go get a mortgage or get a line of credit – with a negative rating on their credit file, that's not going to help them," Abdo said.

The Equifax data follows a Bank of Canada report last month that suggested climbing debt levels have put households under increased financial strain amid the recession.

The Financial System Review also said that households are increasingly vulnerable to "adverse shocks" such as higher unemployment.

Jul 09 01:00 PM

[PainfullyAware:]

On Jul 09 08:02 AM prairiedog555 wrote:

> So, if people are losing their homes, and they are not renting, where
> are they living? Why is the vacancy rate rising?


Friends And Family Are "Bunching Up" For Now. The "Collective" may be uncomfortable, due to less space per person, but it conserves cash.

Unemployment continues to climb at the Half A Million Plus rate.

If/When the job market gets so bad that the "Group Income" can not sustain shelter, the blight will become apparent. For now it is contained within the good will of close contacts.

Things Are Not Well.

Those who vote into law bills that were not personally read are committing treason. When politicians do not even pretend to "Represent" The Trust Of The People Becomes Strained.

Hunger and Desperation does not make compliant citizens. The Natives Are Becoming Restless.

Jul 09 01:18 PM

[Whippet:]

Jeff-
Nice article. The only homebuilders left in business will be building concrete-walled Soviet block-style housing for Boomer downsizers.

You could even write a post on the insidious phenomenon of Perpetual Negative Amortization Mortgages- property taxes. I believe these are becoming the nail-in-the-coffin of personal home ownership, for the masses. One can afford a modest home on a modest salary, but the $400 additional monthly rent to the Failed Re-educationists makes it impossible. If at an extreme one owns his house free and clear, withdraws from rat-race society, and homesteads- homeschooling his children, if need be- he will still be required to make ever-increasing payments to the True Owners. This makes subsistence living nearly impossible, and destroys personal liberty.

Jul 09 01:39 PM

[Jeff Nielson:]

Lots more good comments.

Yes, Theresa, "kick the can" is a good short-hand summary. For yet ANOTHER example, just check out my NEXT post.

Optionsgirl, thanks for pointing out that we Canadians should NOT be overly complacent. As I've stated here on a couple of occasions, one of the reasons I (as a Canadian) am taking such an interest in U.S. problems is that I see Canada headed for many of the same problems - they just are not as far advanced.

Whippet, there will also be a few "home-builders" able to stay in business through jumping into the "private prison" market in the U.S. - the ONLY growth-sector in U.S. construction.

After all, the long-term plan for the U.S. government is to make these private prisons "home" for millions of Americans - where they are provided with only minimal food and shelter, while being exploited for slave-labour.

Jul 09 01:47 PM

[nobull:]

serioualy...are you nuts? So someone put a gun to their heads to buy? Dont you have the decency or self-responsiblity to make sure you can afford what you buy? Give me a break.
"However, for those Americans looking to escape the economic slavery which banksters ..."

Jul 09 02:10 PM

[Gregman2:]

Sounds like rents are still too high...maybe more hot air needs to be let out.;-)

Jul 09 03:53 PM

[optionsgirl:]

Jeff, I would like to know why you are quoting the Banker's Manifesto. If you can find one shred of evidence that it is an authentic document, and not an old propaganda piece that has been floating around for decades, please provide it. Really, providing that link flaws your intelligent argument. I think It is a propaganda piece that turned up around the time the Federal Reserve was started. I know that Lindbergh Sr. was adamantly opposed to the Federal Reserve and that he used this piece.
I hope you can provide some authentication for it, as I have never been able to find anything that validates it. Please, share.

Jul 09 05:33 PM

[awake09:]

But not all of these people have mom and dad around. Maybe you mean they are shacking up with girlfriends or boyfriends, renting rooms from strangers, or making cardboard shelters and living under the overpasses.

This is not a big issue to many non-UK descendant cultures, as many families welcome their children or other relatives into their homes. I have both Filipino and Korean neighbors with 2-3 generations staying in each house, and it's not a scary area by any means. You get used to seeing 5-6 cars in front of a house.


On Jul 09 08:25 AM b. shelton wrote:

> They are moving in with Mom and Dad because they cant even get through
> a credit check to get a place to live.

Jul 09 05:36 PM

[awake09:]

And DEBT is only as destructive as is the power of the LENDER to collect it.

Jul 09 05:39 PM

[TinyTim:]

"banks are only pretending to help U.S. homeowners avoid foreclosure" ... "when cash-strapped Americans can suddenly rent accommodations at very reasonable prices – and with a great selection " what happens to all those underwater homeowners??
They walk to apartments, which only makes the housing problem worse.

hence:
"one more piece of evidence that the U.S. housing market has not even begun a bottoming process."


"People without homes will not quarrel with their leaders.”
Careful- "when you got nuthin, you got nuthin to lose."
I've seen rioters burn down their own apartment buildings in the 60's.

Jul 09 05:50 PM

[DaveGTestr:]

Very interesting. What is CRE?


On Jul 09 06:07 AM CautiousInvestor wrote:

> From the link to the article:
>
> "The national vacancy rate rose to 7.5 percent, the highest since
> 1987 and an increase of 1.4 percentage points from last year, according
> to a report Reis released on Wednesday. The record high was 7.8 percent
> in 1986."
>
> Clearly single family housing and apartments are joined at the hip
> and there is simply too much of both........with an adverse feedback
> loop linking the prices of both housing classes. In the current environment,
> it's a race to the bottom.
>
> Perhaps as importantly, apartments fall within CRE and as a group
> this asset class has depreciated around 40% and there is slighly
> more than $1 trillion of CRE coming up for refinancing between now
> and the end of 2014. Without going through the math, to roll over
> one of these loans the owner will need to bring a check to closing
> equal to 28% of the current loan.
>
> We're going to hear a lot more about CRE as its the next financial
> time bomb.

Jul 09 09:03 PM

[Northstar10000:]

My daughter just vacated her apartment and moved back in with us.
The apartment remains vacant since she moved out in May. Our neighbors whole family moved back in with them. Two more apartments empty. Project the number out and see what happens.
My daughter told me she won't be moving out soon. Yes I do charge her some rent.

Jul 09 09:54 PM

[michaelsass:]

I own a condo and have an outstanding balance of $140k, consisting of $104k primary and $36k secondary. I took the home equity to consolidate debts. At the time the property was valued at $163k but now it is valued at $134k. I'm looking to sell because i am engaged and will be moving into my fiancee's home. Check obamamortgage2009.blog... If I have a buyer who offers me within say $5-7k of the outstanding, can i agree to assume a loan on the residual and pay the bank the difference over time with interest? The same bank holds both mortgages.

Jul 10 01:15 AM

[Jeff Nielson:]

Optionsgirl, turning your argument around, the Lindbergh family has had nearly a century to REFUTE the remarks attributed to Lindbergh.

Can you provide ANY evidence to show them denying those remarks?

Then there is the simple fact that a document a century old just HAPPENS to describe (perfectly) the conduct of U.S. banksters TODAY.

If it's NOT authentic, then at the least it has been ADOPTED as the "play-book" for U.S. banksters of the 21st century.


On Jul 09 05:33 PM optionsgirl wrote:

Jul 10 01:27 PM

[dirtyharry:]

Jeff -

How come you and I know this and the builders themselves do not? How come these multi-million (sometimes billion) dollar enterprises fall for Bernanke's nonsense and you and I do not? The numbers are so obvious. The writing is on the wall.

Even in the case that they're looking for cash flow, building 50% more than they are able to sell is hardly the way to generate cash flow, even if they're willing to take losses on a per unit basis.

Now Buffett has weighed in: “If you want to end the recession as soon as possible,” Warren Buffett told CNBC yesterday, “do nothing to encourage new home builders."

While I certainly agree with it, I find it astounding that not everyone is on the same page with this.

On Jul 09 12:02 PM Jeff Nielson wrote:

> Dirtyharry, U.S. home-builders appear to clearly be in "every man
> for himself" mode. Each one wants/needs to keep generating cash-flow
> - even if they can't sell units at a profit.
>
> And no doubt these companies have ALSO been influenced by Bernanke's
> serial-lies, and they keep expecting the market to rebound. I said
> a year ago that I fully 90% of these companies to go bankrupt - especially
> when you factor in retiring baby-boomers dumping $1 to $2 TRILLION
> in real estate onto an over-supplied market (in order to finance
> their retirements).

Jul 10 01:37 PM

[optionsgirl:]

Michael, I see you have posted requests for help several times. I don't think anyone here is qualified to give you individual advice on how to handle your financial problem. I think you should see a lawyer that specializes in bankruptcy and foreclosure, and get individual advice that is state specific. The lawyer will need copies of your loan docs for review. Best of luck to you.


On Jul 10 01:15 AM michaelsass wrote:

> I own a condo and have an outstanding balance of $140k, consisting
> of $104k primary and $36k secondary. I took the home equity to consolidate
> debts. At the time the property was valued at $163k but now it is
> valued at $134k. I'm looking to sell because i am engaged and will
> be moving into my fiancee's home. Check obamamortgage2009.blog...
> If I have a buyer who offers me within say $5-7k of the outstanding,
> can i agree to assume a loan on the residual and pay the bank the
> difference over time with interest? The same bank holds both mortgages.

Jul 10 03:20 PM

[optionsgirl:]

Dave- I can't believe no one took the time to answer your question. CRE is commercial real estate.


On Jul 09 09:03 PM DaveGTestr wrote:

> Very interesting. What is CRE?

Jul 10 09:11 PM

[optionsgirl:]

Lindbergh Jr was a member of the German American Bund. That doesn't validate the Protocols of the Elders of Zion, does it? You quoted a poison pen piece.
Expecting the family to renounce the family politics as evidence of legitimacy is not a legitimate argument. It's b.s.

On Jul 10 01:27 PM Jeff Nielson wrote:

> Optionsgirl, turning your argument around, the Lindbergh family has
> had nearly a century to REFUTE the remarks attributed to Lindbergh.
>
>
> Can you provide ANY evidence to show them denying those remarks?
>
>
> Then there is the simple fact that a document a century old just
> HAPPENS to describe (perfectly) the conduct of U.S. banksters TODAY.
>
>
> If it's NOT authentic, then at the least it has been ADOPTED as the
> "play-book" for U.S. banksters of the 21st century.

Aug 02 11:26 PM

[marc1673:]

Smart people will find an opportunity here to prosper as well. Much like the folks who are taking the advantage of the residential units short sale investing, same folks will find the way to get the distressed multi-unit deals thru the short sale process and will purge the market of the overpriced commercial real estate. Thoughts?

Oct 31 01:50 PM