Sucker Punch On Main Street - Disturbing Facts About The Fed's Phony Housing "Recovery" | Zero Hedge

Sucker Punch On Main Street - Disturbing Facts About The Fed's Phony Housing "Recovery" | Zero Hedge: "The Fed’s claim of trying to help the typical consumer is hogwash. The benefits of the low interest rate policy have flowed only to the upper income strata. In our monthly updates of our “Thanks Fed For Helping the Average Guy” we see that the chance of the “average guy” to buy a new home remains virtually nil. Not only has there been no recovery in homes priced under $200,000, sales in that price range have essentially disappeared in spite of the world’s major central banks pushing mortgage rates down. Builders no longer have any interest in producing product in that price range because demand has weakened so much at that level. People at the reported median US household income simply can’t afford to buy houses regardless of the fact that they may be borderline qualified.

Prior to the housing crash, most new homes sold were in the under $200,000 price range. Since 2007, mortgage rates have been cut nearly in half. Yet production and sales of homes in the under $200,000 range have continued falling, now down 61% since 2007."

If monetary policy were helping the housing market, the rate of homeownership should be at least stable. Instead, as mortgage rates have been consistently suppressed since 2007, homeownership has fallen concurrently.

The problem is that as the Fed and its cohort central banks have been busy pushing down long term interest rates, that has pushed house prices up so fast that there has been no increase in affordability.

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