Home ownership rates are below normal. Demographically things are askew, but the planning of demographics and economic spending should not surprise anyone. It never allowed for much of a change in spending patterns, and it assumed too much similarity without choices - and a rigid age bracket. An article from August 2016 highlights issues going into Q4 and 2017 - which they blamed on student loans, tighter credit and a basket of demographic spending patterns in flux...
- The homeownership rate stood at 63.7% in the fourth quarter of 2016, according to the U.S. Census Bureau. That was down from a high of 69.2% during the housing boom and below the 65% economists say is a normal level. Strict mortgage lending standards, younger households putting off marriage and children and a lack of inventory of homes for sale are combining to depress homeownership - @ WSJ
- The housing recovery that began in 2012 has lifted the overall market but left behind a broad swath of the middle class, threatening to create a generation of permanent renters and sowing economic anxiety and frustration for millions of Americans. Home prices rose in 83% of the nation’s 178 major real-estate markets in the second quarter, according to figures released Wednesday by the National Association of Realtors. Overall prices are now just 2% below the peak reached in July 2006, according to S&P CoreLogic Case-Shiller Indices. But most of the price gains, economists said, stem from a lack of fresh supply rather than a surge of buyers. The pace of new home construction remains at levels typically associated with recessions, while the homeownership rate in the second quarter was at its lowest point since the Census Bureau began tracking quarterly data in 1965 and the share of first-time home purchases remains mired near three-decade lows - @ WSJ
We are just a wee bit above 2006 prices - so there has been a 10 year lag on pricing. This should not come as a surprise. Fundamentally I see housing stock as a fixed situation. We are likely over the big population booms and builds that allowed housing to be a (small but significant) piece of US GDP. We are likely to see more jobs lost to construction, mortgages and related industry, outside of utilities and maintenance. Take the US Northeast for example: renovations and re-buildings verses new construction. In Atlanta we have condominiums, which never seem to suite anyone but the builders in a land rich city. Apartments are great, but the luxury set is correlation to wealth and population.
“I don’t think we are in a normal housing market"
- Lawrence Yun, chief economist at the National Association of Realtors
Last Weeks: Housing Post At Chaganomics