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Reports US

US stock market daily report (June 05, 2014, Thursday)

June 6, 2014, Friday, 06:05 GMT | 01:05 EST | 09:35 IST | 12:05 SGT
Contributed by Millennium Traders

Strategic research provided by Hart Research Associates shows that since 2011, nearly 52% of all Americans have had to make at least one major sacrifice in order to cover their monthly rent or mortgage payments. According to the “How Housing Matters Survey” from Hart and commissioned by nonprofit John D. and Catherine T. MacArthur Foundation, these sacrifices include: deferring saving for retirement, getting a second job, increasing credit card debt, moving to a less safe neighborhood or an area with a lower quality school and reducing health care received. Americans are finding rent rates skyrocketing or are faced with an unaffordable mortgage payments due to higher interest rates and, their inability to get a bank to refinance their current mortgage with a lower interest rate resulting in a reduction of their mortgage payment.

The three biggest hurdles potential home buyers face are - down payments, poor credit and tighter lending standards by banks. Due to the slow economic recovery, nearly 84% of young people are delaying major life decisions. Historically low interest rates for mortgages provide no help for these people. Daren Blomquist, vice president at real estate data firm RealtyTrac said, “The slow jobs recovery for young adults has made it harder for them to save and to get a mortgage.” Following the recession of 2008, over 7.5 million homeowners lost their home to foreclosure or short sale and an additional 9 million homeowners remain underwater and owe more on their mortgage than their home is worth.

Of respondents to “How Housing Matters Survey”, nearly 43% indicate that owning a home is no longer “an excellent long-term investment and one of the best ways for people to build wealth and assets,” and nearly 50% say buying a home has become less appealing. Owning a home is not the all American dream any more. Of renters, nearly 58% believe that “renters can be just as successful as owners at achieving the American dream.” Over the past two years, housing prices have increased by nearly 20% while most wages have shown very little if any, increase. Blomquist said, “If one looks at the last seven years as a predictor of housing market behavior in the future, it certainly should give one pause about whether buying a home is a good investment or not.”

For 15% of American homeowners, the monthly mortgage payment on a median-priced home requires more than 30% of the monthly median household income which has long been considered the maximum for mortgage payments. In Manhattan, New York, mortgage payments on homes represent 77% of the median income. In San Francisco County California, mortgage payments represents 70% of the median income.

Lawrence Yun, chief economist at the National Association of Realtors said, “Affordability issues are real and a major hurdle. Only by adding more new supply, via housing starts, can home prices be tamed."