It’s no secret that the housing market is tough right now for builders and Realtors alike. A recent article on Builder Magazine stated that the future of the housing market will hinge on job creation.
Last week, The Joint Center for Housing Studies at Harvard University released “The State of the Nation’s Housing 2011,” its annual outlook on housing and homeownership through the rearview mirror of the past few years. The essence of the report, which the Joint Center embargoed for publication until this morning, is that the strength of housing’s recovery “will rest on how fully employment bounces back.”
- The national homeownership rate fell below 67% in 2010, down from 69% in 2004. The excess inventory of unsold homes in 2010 equaled about 700,000 for-sale homes and 160,000 rentals.
- While most baby boomers are expected to age in place, one in three heads of households aged 65 to 74 relocated in the previous decade, many to smaller homes. If that mobility rate continues, some 3.8 million aging boomers would be moving in this decade. At any rate, baby boomers are projected to increase the number of households over age 65 by 8.7 million, or 35%, in this decade.
- Even though homeownership rates among young adults were slipping before the recession hit, and that slippage accelerated during the recession, the Joint Center still believes that enough echo boomers will want to buy a home to boost the number of young adult households over the next decade. “Indeed, assuming headship rates revert to their 2007-9 average, and that immigration is just half of what the Census Bureau now projects, the number of households under age 35 will grow to nearly 26.5 million in the next decade.”
- The “one bright spot” in the housing sector recently is the rental market. Between 2007 and 2009, 1.4 million single-family homes became rental properties. And between 2004 and 2010, the number of renter households expanded by 3.9 million to a total of 37 million. Last year, rental vacancy rates fell to 9.4% in the fourth quarter, the lowest rate since 2003, which reverses a trend in previous years where supply was significantly outpacing demand. However, low-income rental continues to dissipate.
- Minorities will account for seven out of 10 of the projected 11.8 million new households in 2010-20 (which the Joint Center says is a conservative estimate). Hispanics alone will contribute nearly 40% of that increase, and by 2020 minorities should make up one-third of all U.S. households.
Do you see yourself buying a home in the next 5 to 10 years? Why or why not?