Housing Recovery Still Faces Many Challenges - Economic Conditions, Housing Data, Demographics, Housing Trends - Builder Magazine.
OK, I am about done discussing housing and real estate until the June numbers start to come out. I just found this article through the Sacramento Bee Real Estate blog and wanted to highlight a couple of points. The information in the article is from the Harvard Joint Center for Housing Studies. A couple of lines caught my eye and I wanted to comment.
First on possibilities of a housing recovery:
Any talk of a housing recovery is moot until foreclosed inventory shrinks, unemployment rates abate and banks make mortgages available for more buyers.
So if house prices do start to recover under current conditions, what will happen when these events actually occur?
Using the reports most pessimistic estimate of household growth the U.S. population will ad 12.5 million households from 2010 until 2020. That looks like 1.25 million per year to me and the homebuilders are continuing to churn out homes at a 500k per year rate.
The reason why the Joint Center doesn’t think less immigration would result in even lower household formation is because of its expectation that buyer demand among the Echo Boom generation—which is five million people larger than the Baby Boomers—will be high enough to drive the housing industry’s growth “for the next 10 years.†(emphasis added)
So if the bankers can control the amount of foreclosed properties they send into the market. And, believe it or not, they seem to be trying to do that. And if the federal government can keep mortgage rates near or under 5%: They control Freddie and Fannie, why wouldn’t they? 2009 may be the bottom in the current housing cycle.
