Popularised after the Second World War, the idea of the American Dream has long centred around the idea that anyone, from any background in the United States, can achieve prosperity and success.
For nearly 75 years, this idea has often been symbolically represented by a middle-class family with two dogs, two kids, an American-made car and a suburban home with a white picket fence. While the “Modern American Dream” continues to include pets and children (increasingly more pets than children) and an automobile (now more evenly split between American pickup trucks, electric vehicles, and various international brands), one piece of this dream is becoming increasingly unattainable for the average American: owning a home.
Supply/demand imbalances of housing stock in the US, exacerbated by an ageing population clinging to homes that they either own outright or with extremely low mortgage rates, combined with a large pullback from developers following the 2008 financial crisis, continue to ripple through the economy and the fixed income universe in unexpected and meaningful ways.
Where are we today?
Activity in the US housing market has ground to a halt, as older homeowners who have locked in low interest rates, or have paid off their homes altogether, are choosing to hold tight to significant amounts of housing inventory. Originations of mortgages in the US (which include new financing and refinancing) could hit two-decade lows, with the majority of transactions among the highest income (highest credit score) borrowers.
The median age of both first-time and repeat homebuyers continues to rise, as the combination of an undersupply of homes (both new and existing) and higher mortgage rates continues to keep younger buyers on the sidelines, with wages unable to keep up with parabolic increases in homeownership costs.
Hellbound and Down 