On Monday June 22, the Joint Center for Housing Studies at Harvard University released its annual State of the Nation's Housing Report. Many findings are obvious, such as foreclosures soared because of lenient subprime lending practices and that the downturn in homebuilding is the worst since the 2nd World War.
However, there are many findings in the report that are interesting and may not have been covered elsewhere. We will highlight some of them.
In Many Areas Real Housing Prices Has Fallen to 1990s Levels
Homeowner Vacancy Rates
"The homeowner vacancy rate hit a record breaking 2.8 percent last year....Owner vacancy rates in two- to four-unit buildings were more than three times - and in five to nine-unit buildings more than five times - the single-family vacancy rate."
Existing Home Sales Improving in Hardest Hit States
The hardest hit states, including Nevada, California, Arizona, and Florida, have seen double digit percent of sales increases from 2008 to 2009.
Non-Prime Lending Sharply Reduced
The elimination of most non-prime lending practices has drastically reduced the pool of potential buyers. "After years of record-setting originations, proliferation of new products, and tolerance of lax underwriting, mortgage lending did an about-face in 2007 and 2008....Originations fell by 33 percent in real terms in 2008 alone and by 62 percent from the 2003 level."
Positive Short-Term Outlook
"With prices down by double digits, interest rates moderating, and reasons to believe that pent-up demand is building, the prospects for a recovery have improved."
Positive Long-Term Outlook
"The record size of the echo-boom generation now reaching young adulthood should help keep household growth at least on par with 1995–2005 levels….Over time, the combination of pent-up demand from deferred household formation and low levels of home building will reduce the excess vacant inventory.... "