HOUSINGNEWS REPORT
PERSISTENT HOME PRICE APPRECIATION PRESSURES MARKET ORTHODOXIES
BUY OR RENT IN 2018? MORE AFFORDABLE TO BUY OR RENT IN 2018 BUY RENT
Technology and outsourcing are remaking the workplace and with it the housing choices made by millions of people – and that in turn is transforming the nature of home price appreciation at the regional, local and hyperlocal level. The Inventory Shortage The most immediate impact on the housing market is a profound lack of inventory that is driving up prices, a shortfall which will continue in 2018. Figures from the Census Bureau show that between 1988 and 2016 the percentage of owners who moved each year fell from 9.5 percent to 5.0 percent. That lack of churn in move- up homeowners has pushed up the average homeownership tenure to 8.18 years as of the end of 2017 – nearly double the average of 4.22 years between 2000 and 2008, according to ATTOM Data Solutions. Americans don’t move as much as they used to and the result is fewer houses to buy. The inventory shortage is real and it pushes up home values. According to NAR, December’s unsold inventory was at the lowest level since 1999. “There’s no question that inventory shortages are slowing homebuyers in much of the country,” 2018 NAR President Elizabeth Mendenhall told the Housing News Report . “The months supply of homes for sale is well below a balanced market – which is typically six months – in most markets. Low unemployment and a strong economy
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“Low unemployment and a strong economy will continue to grow demand for buying, but supply simply needs to catch up. Homebuilders are expected to slowly ramp-up production this year, and more homeowners will likely decide to sell. Therefore inventory conditions will hopefully see some improvement this year.”
ELIZABETH MENDENHALL 2018 NAR PRESIDENT
will continue to grow demand for buying, but supply simply needs to catch up. Homebuilders are expected to slowly ramp-up production this year, and more homeowners will likely decide to sell. Therefore inventory conditions will hopefully see some improvement this year.” If fewer people are moving then fewer homes are for sale. That’s one reason for the inventory shortage but there are others as well.
For instance, it’s been widely forecast that mortgage rates are likely to rise in 2018. If that’s the case why should homeowners give up financing now in place to sell and then finance a replacement home at a higher cost? A construction surge could ease the inventory shortage but a meaningful increase is unlikely. The National Association of Home Builders (NAHB) expects single-family home
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FEBRUARY 2018 | ATTOM DATA SOLUTIONS
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