Just a quick comment and some thoughts on an interesting post, QE and the rental market, at FT’s Alphaville which looks at some Paribas research into the US housing market:
A move from ownership to renting could blunt the impact of a housing market recovery on wealth related spending, and in a low growth environment with weak real per capital growth in disposable income, high relative rents may impact median consumer spending going forward. What this may also reinforce is a further movement towards the extremes in wealth distribution that we have seen over the last few decades. Such a dynamic would weaken the overall growth in personal consumption expenditure as well as focus investment on housing as opposed to capital investment.
So positives = support for housing prices via demand for foreclosed properties + improvement in bank liquidity and potential improvement in balance sheets (depending on differences between balance sheet and transaction values) which may lead to more lending + improvements in consumer confidence.
So negatives = transfer of disposable income from those less well off to those with capital, potentially reducing the expenditure of one section of the market and increasing the potential of the other, with the total difference being the wealth and expenditure impact of the renters versus the wealth and expenditure impact of the landlords + unknown impact of capital allocation decision on capital investment + reduced ability to borrow from one segment that may need to borrow to purchase assets and reduced need to borrow from another segment that has less need to borrow.