As if we haven't learned anything from the past another US housing bubble is already about to burst. Today, many banks have again used the same formats in lending that instigated the first financial and housing bubble in 2008. Many of the federal policies that were intended to stave off another financial crisis have been either ignored or reworked in favor of these still too big to fail banks. Banks and mortgage companies continue to issue mortgages knowingly that many people will be unable to pay back their mortgages at some point in the future. Maybe not right away but eventually many individuals will run into financial difficulty. A recent report on the reality in todays economy shows that over 40% of the population have accounts either credit cards of other past due bills that are in collections. This figure only showcases that the overall economy in the US is still a long way from recovery.
Trouble is brewing under the facade of recent surges in real estate property and apartments. Today, many homes have seen their property values increase by more than 25% in just the past two years. In many areas again the trend is very favorable for homeowners to recoup the value of the original price of their property. Rental property is again seen a sharp spike in rents. In many parts of the world everywhere you go have seen real estate prices continue to increase. Take many of the cities in China where that country is continuing building rental housing. Many of those cities have now an over abundance of vacant overpriced apartments. The same thing is already happening here.
While single family home prices rise rental units have also seen a drastic price increase. The problem is coming from the fact that the current number of employment opportunities that are available just don't equate to the rising costs of home ownership and now the cost of all these new rental units. The only ones that are making huge profits are the banks and investment firms that manage to bundle mortgages and develop high rise apartment buildings. A typical example is occurring right here in Tampa, Florida. This is where two more high rise apartment building are already in the works in Harbour Island. They have managed to grease the palms of city officials in reworking the zoning requirements, and also the city inspectors to approve the construction. Already the city of Tampa has an overabundance of rental properties that command huge rents. Now we are adding two more high price apartment buildings.
There are apartment complexes all thorough-out the tri city area of St. Pete, Clearwater and Tampa that the typical one bedroom unit of about 700 square feet rents start at over $1200 per month. This new high rise in Harbor Island that same one bedroom unit will go for over $2400 per month. You would think that with these very high rents the construction that goes into these apartment buildings would be of the highest quality when in fact that is not the case. To gain more profits construction firms continually use inferior quality products and in many cases they contribute to the overall risk of construction defects. But, with the greasing of city inspectors to look the other way profits continue to roll in.
It is a known fact that the Tampa area still has one of the highest foreclosure rates in the country. Not only that the medium income levels are under $35,000 per year, while unemployment hovers at close to 18%, contrary to what the media and our illustrious elected officials keep saying. The hard reality is with all this new development coinciding with the costs involved either in buying a home or renting still remain unaffordable for too many. Yet, banks continue to lure people into subprime mortgages. The riskiest type of loans. It seems the governments policies to curb the banks zeal in lending practices have only encouraged more of the same types of loans that started the original financial crisis of 2008.
What is not being reported are so many younger adults now have to group together like in college dorms in order just to afford a low budget apartment in areas that crime infested. So many are working longer hours just to feed themselves, keep the lights on and with the cost of energy rising too many can't afford to have the air conditioning on during the hot muggy summer days that Florida is so accustomed to be having. Now, with all this construction again like in China too many of these apartment complexes remain with around 45% occupancy. Those numbers don't reflect the turnover from one renter to another. There really isn't any long term residents in these units.
With so many apartments being built with high rents attached when there really isn't enough employment opportunities with pay scales capable of adjusting to the high rate of rents makes for an huge financial bubble that is already set to burst. We would be wise to look at what happened in China when they undertook to build whole cities but with no jobs to match. Where there were jobs they were too far away and didn't offer the wages needed to make it possible for the Chinese to rent these newly built apartments. Meanwhile whole cities remain almost like a ghost town. The United States is not as bad yet but if this trend in construction of unaffordable apartment buildings and with the extension of subprime mortgage lending continues the perpetrators of financial lending will bring about a financial debacle that is a repeat of the financial crisis we just went through.