Harvard University’s Joint Center for Housing Studies has recently released “The State of the Nation Housing: 2011 Report.”
Stating that “renewed job growth and stronger consumer confidence are needed to spark the housing recovery,” the report indicates not much has changed through 2010.
Homeowner demand is currently being held back by the continued decline in home prices, ongoing foreclosures and the large share of homeowners who still find themselves underwater with depressed home values.
The report states the home ownership rate dropped nationally in 2010 to 67 percent from 69 percent in 2004. Meanwhile, rental housing is on the uprise. In order for the excess supply to be absorbed, we need a more normal rate of household growth, and while that is seen as coming, economic factors are still weighing heavily on wouldbe new homeowners.
The report further highlights the fact that baby boomer households are projected to increase by 35 percent over the next decade and may cause a market for smaller homes to expand.
Nothing would spur housing growth more than economic growth, however. The number of younger households is due to rise sharply. First-time homebuyers will be looking for new product, which is currently at all-time inventory lows. A turnaround in demand could spur a tighter market and therefore increase prices. Increased job growth, recovering economy, more young adults trending up in income, baby boomers seeking to move to smaller homes — all could help the housing market, which seems to be making a slow turn toward recovery.