There’s plenty of news about the improvement in prices in the housing market. The FHFA, Federal Housing Finance Agency’s monthly House Price Index report was just released for June, and there was one interesting data set. The rate of home price increases nearly doubled from June 2012 to June 2013 (8.6%) over the same period from 2011 to 2012 (4.5%). Home prices in some markets in Texas and Colorado are hitting new record levels.
At the same time, the rate of home ownership continues to decline to decade-low levels, with rental vacancy rates still declining. This is in spite of the fact that much of the buying activity over the past three years has been cash investor purchases of properties to be placed into rental service. In particular, first-time homebuyers are having great difficulty getting into the buying market. Low for-sale inventories, and rising prices and interest rates are keeping these buyers out of the market and moving into rentals.
The home ownership rate is down to 65.1 percent, around where it was more than two decades ago. Los Angeles statistics show a roughly 50/50 split of owners to renters. Today the home ownership rate in California is down to 54.5 percent, having lost 233,000 homeowners and gained 500,000 renters since 2007. The saying “As California goes, so goes the nation” is concerning many housing analysts. The “rental nation” trend seems to be less conjecture and more expectation these days.
Housing starts are another indicator. Builders are starting more multi-family units at a frantic pace, while single family home starts are up, but not nearly as much. With the prices, more difficult mortgages and higher interest rates, builders are betting on far more renters entering the market than buyers over the next few years.
Nearly every potential first-time home buyer has parents or friends who have lost a home to foreclosure since 2006, so their view of home ownership is tarnished, perhaps for some time to come. The poor economy and weakening jobs market are not helping, as there is a great deal of concern about future household financial health. Being a rental nation may not be the worst thing that can happen, but it certainly turns our historical view of “success” in America upside-down.
There’s plenty of news about the improvement in prices in the housing market. The FHFA, Federal Housing Finance Agency’s monthly House Price Index report was just released for June, and there was one interesting data set. The rate of home price increases nearly doubled from June 2012 to June 2013 (8.6%) over the same period from 2011 to 2012 (4.5%). Home prices in some markets in Texas and Colorado are hitting new record levels.
At the same time, the rate of home ownership continues to decline to decade-low levels, with rental vacancy rates still declining. This is in spite of the fact that much of the buying activity over the past three years has been cash investor purchases of properties to be placed into rental service. In particular, first-time homebuyers are having great difficulty getting into the buying market. Low for-sale inventories, and rising prices and interest rates are keeping these buyers out of the market and moving into rentals.
The home ownership rate is down to 65.1 percent, around where it was more than two decades ago. Los Angeles statistics show a roughly 50/50 split of owners to renters. Today the home ownership rate in California is down to 54.5 percent, having lost 233,000 homeowners and gained 500,000 renters since 2007. The saying “As California goes, so goes the nation” is concerning many housing analysts. The “rental nation” trend seems to be less conjecture and more expectation these days.
Housing starts are another indicator. Builders are starting more multi-family units at a frantic pace, while single family home starts are up, but not nearly as much. With the prices, more difficult mortgages and higher interest rates, builders are betting on far more renters entering the market than buyers over the next few years.
Nearly every potential first-time home buyer has parents or friends who have lost a home to foreclosure since 2006, so their view of home ownership is tarnished, perhaps for some time to come. The poor economy and weakening jobs market are not helping, as there is a great deal of concern about future household financial health. Being a rental nation may not be the worst thing that can happen, but it certainly turns our historical view of “success” in America upside-down.