Housing Update

While most of us like to keep a pulse on the flipping market, anyone can admit that the Housing Market is directly tied to investing in real estate. We recently came across some info from the National Home Builder’s Association that we wanted to share with our readers. Seems the Joint Center for Housing Studies of Harvard University thinks it is pretty important too.They release the  State of the Nation’s Housing, annually that provides a periodic assessment of the nation’s housing outlook and summarizes important trends in  economics and demographics. Let’s take a look at some of their top findings:

real estate investing, flip for profitThe U.S. housing recovery continues, but faces ongoing challenges. Rising interest rates, tight credit, stagnant incomes and student debt are moderating growth and keeping millennials and other first-time home buyers out of the market

The homeownership rate continues to decline, but minorities are an increasing presence. The rate fell for the ninth straight year in 2012-13, but minorities represent a growing share of first-time home owners.

Sluggish household growth should improve as the economy recovers. Annual household growth of 600,000 to 800,000 remains well below the 1.1-1.3 million annual averages of the 1980s and 90s. But in the 10-year period between 2015-25, demographic forces alone will drive household growth of 11.6-13.2 million.

Strength in the rental market continues to be a bright spot. Renter growth in 2013 remained well above the 400,000 annual average of the last few decades.

The shares of younger adults living with parents are likely to drop sharply with age.The number of households in their 30s should increase by 2.7 million over the next decade, which should boost demand for new housing.

Millions of Americans struggle with high housing costs. Nearly 41 million households were cost burdened (paying more than 30% of income for housing) in 2012, 9 million more than a decade earlier. The situation is particularly grim for renters, where 50% are cost burdened and 28% are severely cost burdened (meaning they spend over half of their income for housing).

The rise and fall in homeownership among younger households mirrors income trends. Between 2007 and 2012, real median household incomes dropped 8% among 25-34 year olds and 7% among 35-44 year olds. For the past two decades, homeownership rates for both of these age groups have closely tracked changes in income.

Multifamily rental supply and demand returned to balance in 2013. As of the last quarter in 2013, slower growth in occupied apartments and faster growth in new apartments coming onto the market brought these measures into alignment.

The housing recovery is following the path of the broader economy. “As long as the economy remains on the path of slow, but steady improvement, housing should follow suit,” said Chris Herbert, research director at the Joint Center.

The future course of homeownership will depend largely on the cost and availability of mortgage financing. On the private side, looser mortgage underwriting standards may help to bolster the housing market recovery. On the government side, if no housing finance reform bill clears Congress, Fannie Mae and Freddie Mac – along with the FHA – will continue to shape conditions in the short to medium term.

Original article appeared July 1st http://nahbnow.com/2014/07/10-key-takeaways-on-housing/

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Erik Hitzelberger has been Real Estate Investor since 2007. While learning the ropes in the market down-cycle, he now teaches others how to use his systems and leverage other people’s expertise to achieve their own goals.

Erik Hitzelberger – who has written posts on Part Time REI.

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About Erik Hitzelberger

Erik Hitzelberger has been Real Estate Investor since 2007. While learning the ropes in the market down-cycle, he now teaches others how to use his systems and leverage other people's expertise to achieve their own goals.

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