EYE ON HOUSING
The chart above presents data from the 2005, 2007 and 2009 editions of the AHS. The data illustrate the number of households who reported that their primary reason for moving to a new housing unit was “to establish a new household” (*see data footnote below on difference between gross and net household formations).As can be seen above, the numbers of such new households fell as the economy entered the Great Recession. Moreover, the share of these newly formed households that became owner-occupiers fell as well, from 38% in 2005 to less than 32% in 2009. The lesson that can be drawn from the AHS data is that as pent-up demand is unlocked, approximately 70% of these new households are likely to become renters. Nonetheless, as rental vacancy rates continue to fall, these new renting households will increase rental demand, push up rents and cause existing renters to become homeowners. It is important to note that this process could be slowed due to increasing requirements for downpayments and obtaining mortgage credit. The analysis here suggests that unlocking pent-up demand could, in the short-run, cause the homeownership rate to fall, as many of the new households added will be renters. While this effect should be temporary, it does add another dimension to the ongoing debate among economists and housing analysts regarding what the low point will be for the homeownership rate as the housing market recovery gains momentum.
Among the 20 component cities, results were mixed. While only 3 cities posted positive gains in January, most of the declines were embedded in strong seasonal patterns, and 12 cities remained above earlier troughs. Phoenix and Miami, among the most notorious bubble markets, were 2 of the 3 gainers along with Washington, DC, the most consistent performer since its early 2009 trough.
More broadly, house prices in Denver, Boston, Detroit, Cleveland and Dallas continued to oscillate in the narrow ranges they’ve occupied since 2009, while prices in Las Vegas and Tampa trended down unabated, although at slower paces since 2009. The most troubling patterns in today’s release are the declining prices in the California markets that threaten to reverse what appeared to be promising recoveries, and the possible re-acceleration of price declines in the Atlanta market.For the full histories of the 20 markets included in the Case-Shiller composite, click here cs. Archival Designs' feature luxury house plan, click here: Park Place
- Joanne Loftus