The Shelter Indicator dissects the macro-economic data to reveal a barely improving picture. The American dream of home ownership deflated sharply after 2008 and only now is showing slight recovery with increased housing starts and rise in property values in some urban areas. The housing market continued as an important buttress to the economy until the foreclosure crisis. Our analysts foresaw the US housing boom, supported by low interest rates, as a bubble. The bubble burst as homeowners lost equity, succumbed to robo-signers and suffered job and income loss from the 2008-2009 recession. Shelter deprivation still exists. Estimates range from 1.6 million to 3.5 million Americans homeless, in transitional or emergency housing, a third estimated to be households with children. These statistics seem to be a reflection of our national poverty gap shown in our Income Indicator. The US savings rate is at 2.6%, the second lowest since 2007.
Mortgage debt stands at $10.5 trillion (US Census 2010). When the economy turned sour in late 2000, homeowners re-financed to consolidate their other loans and take advantage of low interest rates. Even so, new worries emerged about accounting problems at Fannie Mae and Freddie Mac (now owned by US taxpayers), which together stood behind $4 trillion of US mortgages. Job losses have helped cause mortgage default rates to increase to the highest level in 30 years, with nearly 7 million mortgage holders leaving their homes to foreclosure or short sale. Bank and consumer credit is more difficult to come by even with rock bottom interest rates. Job losses also make prospective homeowners wary and consumer confidence declined in 2003 and 2004 and severely in 2008-2009. Any increase in interest rates could throw many more homeowners into default and adversely affect bank earnings. In the current round of mortgage re-financing, home owners should avoid variable, adjustable rate mortgages. The shift to rental housing is creating another potential bubble as hedge funds and private investors pile into buying foreclosed homes for rentals.
The state of shelter in the United States also affects opportunities for social mobility, education, and energy efficiency, and thus is related to many other indicators, including Employment, Income, Health, Energy, and Environment.