Where Housing is Headed

WHERE HOUSING IS HEADING

The 2009 State of the Nation's Housing Report from the Joint Center for Housing Studies of Harvard University concludes:
Housing affordability has been restored - driven by low interest rates and home-price declines.
Home sales are stabilizing & inventory balancing - driven by temporary first-time buyer tax credits and low interest rates.
Home prices will drop further - driven by the record numbers of foreclosures entering the market, the increasing number of vacant housing units for sale and rent will put more downward pressure on prices.
Homeownership has fallen - gains in homeownership rates gained during the boom have been erased, falling from 69% in '04 to 67.8% in '08.
Debt-to-income ratio is up - Even with rising affordability the number of households paying more than half their incomes for housing shot from 13.8M in '02 to 17.9M in '07.
The near term - demographic forces favor the rental over the for-sale market. Job losses, falling home prices and tight lending standards will keep housing demand "very low", according to the study.
Steven A. Wood, Chief Economist at Insight Economics, LLC says, "The most recent New Home Sales showed a dip in May and a downward revision in April. However, the inventory of home available for sale dropped by 2.3% to 292k. This is 35.5% below its year ago level and 49.0% below its July 2006 peak level. As a result, the Months' Supply fell to 10.2 from 10.4 in April and a record high of 12.4 in January." Wood continues, "...Home sales appear to have bottomed. Although the inventory of unsold homes is falling, there is still a large overhang of unsold homes given the current sales rate...While the new home market is very weak, the recent data suggests that a bottom maybe at hand. However, there is no evidence that a substantial recovery is in the offing."