The Federal Reserve is helping corporate real estate investors evict poor people from mobile home parks.
With the stimulus checks long ago spent, Americans have gone back to buying things the old-fashioned way – on credit.
Household debt surged by $313 billion in the second quarter to nearly $15 trillion, according to the Federal Reserve Bank of New York Household Debt and Credit Report. It was the biggest quarterly dollar increase in household debt since 2007. In percentage terms, household debt grew by 2.1%, the biggest surge since Q4 2013.
Despite the “improving economy,” subprime mortgage delinquencies remain at record high levels. And the full extent of the problem is masked by forbearance programs.
The delinquency rate on FHA mortgages spiked to 17.5% in February. That was up from 17.0% in January and equals the all-time record set in September and November of 2020, according to AEI’s Housing Center.
Millions of Americans remain out of work. The US economy continues to languish, burdened by government lockdowns and other pandemic-related factors. Retail sales have dropped precipitously over the last several months, underscoring the economic malaise. So, how is it that the housing market is booming?
This is not the ideal time to own an apartment building. Millions are struggling to pay rent and despite the extension of the federal eviction moratorium through Jan. 31 in the latest stimulus bill, a lot of people will likely face eviction in the coming months. According to data released in November, 17 million households are behind on rent or mortgage payments.
Of course, this has a trickle-down effect. If renters can’t pay their rent, that makes it difficult for apartment building owners to keep up with their mortgage payments. If they default, who’s on the hook?
Increasingly, the US taxpayer.
Even as market mania continues over hopes for a coronavirus vaccine, the economic devastation caused by the government response to the pandemic continues to ravage the economy. Seventeen million households are behind on rent or mortgage payments, and nearly 6 million Americans say they are at risk of eviction in the next few months.
Last month, we reported that mortgage delinquencies charted their biggest quarterly rise ever. Digging more deeply into the numbers, we find even more trouble brewing in the subprime mortgage market.
Of the 8 million active mortgages the FHA insures, 17% were delinquent in July. That ranks as the highest level in history. That translates to about 1.4 million delinquent FHA loans.
New home sales blew away expectations in July, coming in at the highest level since 2006. A lot of people take this as a sign of a strengthening economy. Peter Schiff begs to differ. In his podcast, he argued that surging homes sales are actually a sign of a weak economy.
Single-family new home sales rose 14% between June and July to an annual rate of 901,000, according to Commerce Department data. Sales were up 36% on a yearly basis.
Last month we reported that mortgage delinquencies soared at a record pace in April. Well, things have gotten even worse since.
The overall delinquency rate for mortgages on one-to-four-unit residential properties spiked by nearly 4% in Q2, reaching 8.22% by June 30, according to the Mortgage Bankers Association’s National Delinquency Survey. The jump in the delinquency rate was the biggest quarterly rise in the history of the survey.
Gold is knocking on the door of its all-time record price. At this point, it’s not a matter of if gold will break its record but when. In this episode of the Friday Gold Wrap podcast, host Mike Maharrey talks about the dynamics that are driving both gold and silver higher and explains why he thinks gold has a long way to run even after it breaks the record. He also highlights some more economic data that undermines the “quick recovery” narrative.