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Lower Values
Due to lower home values, the recession wiped out $7 trillion in household wealth, according to Bernanke. That's a staggering amount of money equal to half the national debt. It's no wonder Americans feel poor. Bernanke also pointed out that the typical household spends $3 to $5 less for every $100 in lost home value. If so, the depressed home values is reducing consumer spending $200 billion to $375 billion annually — money not generating jobs and increasing living standards.
Oversupply
There's a glut of unoccupied houses for sale, and more than 1 million foreclosed units will enter the market each year for the next few years. The saturation of existing houses on the market is keeping new home construction starts to historically low levels. Rather than seeing at least 1 million starts per year, the industry is achieving about 500,000 starts.
Tight Credit
Credit is still tight as lenders are reluctant to make loans even to qualifying borrowers. Home mortgage credit has contracted by approximately 13 percent since 2007. It appears that the loose credit practices of a few years ago have given way to restrictive practices as lenders are wary of any borrower.
Lack of Demand
Young adults — those in the 29 to 34 age group — are less likely to take out mortgages. These first-time buyers have an incremental effect on the housing market, so their absence is felt down the line.
by Phil Kean Designs
Due to lower home values, the recession wiped out $7 trillion in household wealth, according to Bernanke. That's a staggering amount of money equal to half the national debt. It's no wonder Americans feel poor. Bernanke also pointed out that the typical household spends $3 to $5 less for every $100 in lost home value. If so, the depressed home values is reducing consumer spending $200 billion to $375 billion annually — money not generating jobs and increasing living standards.
Oversupply
There's a glut of unoccupied houses for sale, and more than 1 million foreclosed units will enter the market each year for the next few years. The saturation of existing houses on the market is keeping new home construction starts to historically low levels. Rather than seeing at least 1 million starts per year, the industry is achieving about 500,000 starts.
Tight Credit
Credit is still tight as lenders are reluctant to make loans even to qualifying borrowers. Home mortgage credit has contracted by approximately 13 percent since 2007. It appears that the loose credit practices of a few years ago have given way to restrictive practices as lenders are wary of any borrower.
Lack of Demand
Young adults — those in the 29 to 34 age group — are less likely to take out mortgages. These first-time buyers have an incremental effect on the housing market, so their absence is felt down the line.
Unemployment and Job Creation
The economy has been recovering, as evidenced by an unemployment rate that inches lower and a private sector that continues to create jobs. Though everyone will acknowledge that the economic recovery hasn't been robust, there is a sense that we are on a slow but sustainable path to recovery.
Market Growth
The consensus is that we should expect some modest growth in the housing market this year and stronger growth in 2013. Though the amount of growth seen over the last year and forecast for next year varies by region, there is a consensus that growth of between 1 and 2 percent will occur.
Price Stability
Home prices in much of the country hit their troughs in the first quarter of 2011. Current pricing levels are at the historical median of 3.2 times income. Compare this to the peak of the bubble when home prices hit 4.7 times median income.
Affordability
The confluence of low interest rates, lower prices and growing incomes has reduced the cost of buying a home. Prices should remain low due to the large number of distressed properties on or entering the market, and the current Federal Reserve policy is to maintain low interest rates.
by Phil Kean Designs
The economy has been recovering, as evidenced by an unemployment rate that inches lower and a private sector that continues to create jobs. Though everyone will acknowledge that the economic recovery hasn't been robust, there is a sense that we are on a slow but sustainable path to recovery.
Market Growth
The consensus is that we should expect some modest growth in the housing market this year and stronger growth in 2013. Though the amount of growth seen over the last year and forecast for next year varies by region, there is a consensus that growth of between 1 and 2 percent will occur.
Price Stability
Home prices in much of the country hit their troughs in the first quarter of 2011. Current pricing levels are at the historical median of 3.2 times income. Compare this to the peak of the bubble when home prices hit 4.7 times median income.
Affordability
The confluence of low interest rates, lower prices and growing incomes has reduced the cost of buying a home. Prices should remain low due to the large number of distressed properties on or entering the market, and the current Federal Reserve policy is to maintain low interest rates.
Rental Market
There is an increasing strength in the rental market as the economy strengthens, but potential buyers aren't ready to purchase. Programs such as REO (real-estate owned) to rental should absorb some of the excess inventory given the strength of the rental market. This will help home values from falling further and perhaps encourage new construction starts.
More building trends: Remodeling heats up in 2012
by ON Design Architects
There is an increasing strength in the rental market as the economy strengthens, but potential buyers aren't ready to purchase. Programs such as REO (real-estate owned) to rental should absorb some of the excess inventory given the strength of the rental market. This will help home values from falling further and perhaps encourage new construction starts.
More building trends: Remodeling heats up in 2012
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