HOUSINGNEWS REPORT
MY TAKE
RECORD HIGH U.S. HOMEOWNERSHIP TENURE IN Q2 2017 AVERAGE U.S. HOMEOWNERSHIP TENURE (YEARS)
8.05
9.00
In reality, there is no single reason for the situation we are in today. Rather it is a number of factors that, when combined, suggest to me that the market will not return to equilibrium any time soon.
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
The first reason for the shortfall is purely demographic. As “Boomers” age, they are not following the trends of previous generations. Many are staying in the workforce far longer than their predecessors, and, as they are postponing retirement, they do not feel compelled to downsize. In fact, almost two-thirds of Boomers plan to age in place and not move even after retirement. Without this anticipated supply of homes from downsizing Boomers, there aren’t enough homes for move-up buyers, which in turn limits the supply of homes for first-time buyers. Secondly, as a nation we just aren’t moving as often as we used to. When I analyze mobility, it is clear that people no longer have to relocate as frequently
Now consider that the country has added over 21 million new households during that same time period, and you can see why this is so troubling. It is worth noting that many of these new households did move into rental properties, but this still leaves the U.S. with a substantial housing shortfall, which explains why demand for homes is so high. With the shortage of homes for sale, you would normally expect builders to meet this pent-up demand with new construction housing, but unfortunately, this has not been the case. In fact, new single-family housing starts are running at about 800,000 (annualized), and I believe we need starts to come in at over 1 million to satisfy demand – especially as older
Millennials start to create households of their own and begin thinking about buying instead of renting. We therefore have a quandary. Trust in the housing market has clearly returned, but there are not enough homes to meet the demand of buyers, and when a buyer does find a home, they are met with very stiff competition, which is driving prices increasingly higher.
So why are we in this position and how do we get out of it?
In reality, there is no single reason for the situation we are in today. Rather it is a number of factors that, when combined, suggest to me that the market will not return to equilibrium any time soon.
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JULY 2017 | ATTOM DATA SOLUTIONS
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