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The recession has more than halved the formation of new households.
Between March 2007 and March 2008, the number of new households grew by 772,000, compared with an increase of 1.63 million a year earlier, according to the U.S. Census Bureau.
New households results in fewer home sales and rentals, less furniture sold, and less work for electricians, carpenters, painters—and real estate professionals.
Harvard University’s Joint Center for Housing Studies estimates that the glut of 1.5 million new homes created during the housing boom would be gone now if households had been forming at historical levels.
The downturn also has pushed down immigration levels. Even inflows of illegal immigrants have stopped rising since 2008, according to the Pew Hispanic Center.
Source: The Miami Herald, Annys Shin (07/11/2009)
*Because fewer households are being formed, this also has ramifications for rental activities. The rental rate is not absorbing renters at the rate that one might see given the decline in home purchasing. People are moving in with others…friends, family, roommates, etc.
Housing Market
National average mortgage rates declined from the previous week to 5.14% in the latest Primary Mortgage Market Survey released weekly by Freddie Mac on July 16th. Mortgage rates have declined for three consecutive weeks and are now back to their lowest levels since the end of May. In the week ending July 10th, the MBA’s seasonally-adjusted Purchase Index dropped to 258.8 from 285.6 in the previous week. This purchase index is now back to its lowest levels since the end of May. The latest figure reflects a 9.38% decline from last week and a 28.05% drop from the same period last year.
Both new and existing home prices posted gains in May while existing home sales continued to rebound but new home sales eased slightly. Improvements in both inventory and pricing for the new and existing home markets in May are positive signs for a housing recovery.
New home sales eased a slight 0.6% in May to a seasonally adjusted 342,000 homes from a downwardly revised April figure of 344,000. Sales for the previous three months were also revised lower by 32,000 units. In May, new home inventories declined to 289,000 from an April figure of 298,000 on a non-seasonally adjusted basis. Non-seasonally adjusted units of unsold inventory have not recorded a monthly increase since May 2007 and are now at their lowest levels since April 2001 as builders continue to scale back building activity. There are now 10.2 months of supply on a seasonally-adjusted basis based on the current sales pace which is the lowest it has been since July 2008. In May, median new home prices increased to $221,600 from a revised April figure of $212,600. Median new home prices increased 4.2% from last month but are still down 3.4% from the same year-ago period. Rising rates and prices pushed new home affordability down for the second straight month in May after hitting an all-time high in March.
Annualized sales of total existing homes in May increased 2.4% from April levels to 4.770 million units. This was the first time since January-February 2007 that existing home sales have posted consecutive month-over-month gains. Sales of existing homes are still down 3.6% from the 4.950 million units in May 2008. Median existing home prices in May increased to $173,000 from $166,600 in April. This is the highest median existing home prices have been since December. Existing home inventory declined from the previous month as lower prices helped to spur buying activity and reduce the number of homes for sale. Inventory of existing homes declined 3.53 percent to a preliminary 3,798,000 units from 3,937,000 units in April. At the current sales pace, there are 9.6 months of supply of existing homes on the market. Months of existing home inventory are back to the lowest they have been this year.
Q:We want to list our home to sell it, and we are interviewing real-estate agents. What number should we talk about first, listing price or commission?
A: In any listing interview you’re going to talk about both —
However, the overall sales climate is still slow. The National Association of Realtors‘ latest statistic on existing home sales shows that while the national sales level was up two percent from April to May, it’s still down about four percent from this time last year. We’re still moving at a pace of under five million home sales annually, versus more than six million during the boom year of 2006.
So the most important number for you to talk about in any listing pitch is actually “days on market.” This is a statistic put together by a local group — sometimes it’s your local board of Realtors, sometimes it’s the local Multiple Listing Service — which talks about how long, on average, it takes a home to sell in your area.
Days on market will give you a pretty good idea of how long a slog it’s going to be. If you have a unique property that only appeals to a small number of buyers — say you have a great pool– you can look at that number and pretty much double it.
The trend of days on market will also help tell you tell — in my mind, even more than price trends — whether your market is picking up or slowing down. In the Manhattan luxury market, for example, Jonathan Miller of Miller Samuel reports in the Prudential Douglas Elliman Manhattan Market Overview that days on market expanded to 182 last quarter from 153 the previous quarter. If you wanted to put your chi-chi apartment on the market now, a potential listing agent should be warning that it could take at least six months to sell and have ideas about how to market your home for that long haul.
