What does a Harvard run study say about the housing market?

The quotes found in this post are from "The State of Nations Housing" published by the Joint Center For Housing Studies of Harvard University. One can find the published report here. The Citation for this post can be found at the bottom. I want to express that none of this research is research of my own.

These are quotes are quotes that I personally found interesting for various reasons. The JCHS also had their own highlight sheet that can be found here.

Pg 1 

“1.4 million single-family homes to rentals in 2007-09 (nearly double the number in 2005-07), rental vacancy rates have fallen and given a lift to rents and property values.

“the national home ownership rate dipped below 67 percent in 2010, dow from 69 percent in 2004.”

“the farther the homeownership rate falls, the longer it will take to work through the excess inventory of homes for-sale and held off market”

“at this point, a more normal rate of household growth is needed to hasten the absorption of excess supply. But even though the echo boomers (born 1986 and later)—the largest generation ever to reach heir 20’s—are entering their peak household formation years”

Pg2 

“Many lenders originating low-down payment loans have also imposed higher credit score screens than FHA. If the proposed 20-percent down requirement for qualified residential mortgages passes, low-down payment lending without a federal guarantee may remain sharply curtailed”

“will prevent many borrowers from getting the loans today that they would have qualified for int eh 1990s before the housing boom and bust.” – “there is concern that overly rigid guidelines may unnecessarily restrict access of the low- and moderate-income household to the benefits of home ownership”

“the tide turned in 2010 as the rental vacancy rate fell from 10.6 in the first quarter to 9.4 percent in the last, the lowest quarterly rate posted since 2003”

Pg 3 

If baby boomers follow trends of other generations “3.8 million would downsize their homes over the come decade, lifting the demand for smaller units”

Pg 4 

“Indeed, assuming headship rates revert to their 2007-09 average and that immigrations is just half what the Census Bureau now projects, the number of households under age 35 will grow to nearly 26.5 million in the next decade.”

“Households earning between $45,000 and $60,000 saw the biggest increae in the share of paying more than 30 percent of their incomes for housing, up 7.9 percentage points since 2001. Among those earning less than $15,000, the share rose by only 2.9 percentage points—primarily because nearly 80 percent of those households were already housing-cost burdened in 2011”.

“$14.9 trillion at its peak in the first quarter of 2006 to $6.3 trillion at the end of 2010—well below the $10.1 trillion in outstanding mortgage debt”

Pg 5 

“In the near term, rental markets are likely to lead the housing recovery”

“on the foreclosure front, the good news is that the share of home loans delinquent by at least three months dropped from 5.6 percent in early 2010 to 3.8 percent in March”

Pg 7 

“While prices for low-end homes made especially large gains during the housing boom, they have now dropped much more sharply than those for high-end properties”

Pg 8 

“CoreLogic estimates indicate that the number of homeowners with negative equity edged down from 11.3 million in 2009 to 11.1 million at the end of 2010.”

“But these estimates do not include units held off market in preparation for sale or rent, a category that covers many unoccupied homes in some stage of foreclosure. Vacancy rates for this category are abnormally high and rising”

Pg 10 

“Despite the mid-decade Surge, home construction in the 2000s was lower than in nearly ever 10-year period since 1974”

“While it is difficult to gauge how close the market is to balance, the longer-term outlook is positive. Based simply on the aging of the current US population and average headship rates by age and race/ethnicity in 2007-09, household growth should hit 1.0 million per year over the coming decade”.

“Housing-related activities also affect GDP indirectly. Falling home sales reduce the multipliers associated with the spending of income derived from these transactions. Housing wealth effects—generated by strong house price appreciation---also contribute indirectly to GDP by spurring expenditures on consumer goods and services, often financed with home equity.”

Pg 11 

“Homeowners spend the most on improvement within two years of buying, especially if the property is distressed”

“more than 11 million homeowners remain stuck in homes worth less than their mortgages, 2.0 million are severely delinquent on their payments, and 2.2 million are in the foreclosure process.”

Pg 13 

“In fact, households headship rates among 20-24 year-olds employed year-round are more than 5 percentage points higher than for those who have been unemployed for at least six months”

“and the rising cost of going away to college have all helped to lift the numbers of young adults living with their parents or doubling up with others”

Pg 15 

“As a result, demand for smaller homes should increase steadily as the vavy boomers age. Since young first time homebuyers also tend to purchase homes that are smaller and less expensive than average, the echo boomers will add to the demand for more modest housing as they replace the smaller baby-bust generation in the under-35 age range.”

“The US population is also shifting toward metropolitan areas, although growth remans concentrated in the lowest-density counties of these areas”

Pg 17 

“This is particularly true among 45-54 year-olds, where the number of owner-to-renter moves climbed 42 percent form 2005 to 2009”

Pg 18 

“If age-specific homeownership rates had remained constant in 2005-2010, the aging of the population alone would have pushed the overall homeownership rate up .8 percentage point compared with the 2.2 percentage point decline that actually occurred”

Pg 19 

“assuming a 30-year mortgage and a 10-percent down payment requirement, monthly payments on a median-priced home dipped below $900 last year”

Pg 20 

Graph at the bottom of page 20

pg 21

“the share of home-purchase mortgages originated to person with credit scores below 6000 thus dropped from 9.0 in 2006 to just .5 percent in 2010, while the share originated to person with scores of 740 or higher increased from about 34 percent to about 44 percent”

“While the shifting age distribution of the US population favors growth in homeownership, market conditions could continue to hold down homeownership rates just as they have for the past five years”.

Pg 22 

“From 2006 to 2010, the number of renter households jumped by 692,000 annually on average”

Pg 24 

“But not all rental housing is in multifamily structures. In fact, single-family homes make up a significant—and growing—share of the stock.”

“Overall, the shift of units from the owner to the rental market has more than offset the slump in new construction”

Pg 25 

“Apartment prices jumped 19.7 percent from the trough in the third quarter of 2009 to the fourth quarter of 2010”

“However, newly constructed units are usually more expensive than existing ones, which drives up the average overall cost of rental housing”

“At the same time, many lowest-cost rentals are being permanently lost from the stock, largely because the rents they earn cannot cover the costs of adequate maintenance. In fact, the American Housing Survey indicates that despite the net addition of 2.6 million rentals, the numver of units with rents of $400 or less in 2009 inflation-adjusted dollars fell from 6.2 million in 1999 to 5.6 million in 2009”

Pg 26 

“As rental market continues to tighten and the competition for low-cost housing intensifies, the gap between the demand for and supply of affordable rentals will only increase”

Pg 27 

“by 2009, the mismatch had grown to 10.4 million extremely low-income renter households and just 3.7 million affordable and available units”

Pg 29 

“With rents on the rise, the costs of serving the 2.1 million households that hold housing vouchers (which make up the difference between 30 percent of incomes and fair market rents) are climbing. “

“public housing units are also being lost both to disrepair and to redevelopment with less than one-for-one replacement rates”

Pg 30 

“Residential energy use generates about 18 percent of human made greenhouse gas emissions in the United States, and automotive travel contributes another 18 percent.”

The Number and share of loans more than 90 days delinquent but no in foreclosure are finally falling.”

by Stephen Weinstein PA License # RS316695

Citation: Skurchak, John, Barbara Alexander, Kermit Baker, Pamela Baldwin, Eric Belsky, Michael Carliner, Yun Chen, Susie Chung, Zhu X. Di, Kerry Donahue, Angela Flynn, Christina Harris, Christopher Herbert, Jackie Hernandez, Mary Lancaster, George Masnick, Daniel McCue, Meg Nipson, Nicolas Retsinas, Jordan Roberts, Alexander V. Hoffman, and Abbe Will. "The State of the Nation's Housing." Welcome to the Joint Center for Housing Studies, Harvard University. Ed. Marcia Fernald. Ford Foundation, Federal Home Loan Banks, Freddie Mac, Housing Assistance Council, National Association of Home Builders, National Association of Housing and Redevelopment, National Association of Local Housing Finance Agencies, National Association of Realtors, National Council of State Housing Agencies, National Housing Conference, National Housing Endowment, National League of Cities, National Low Income Housing Coalition, National Multi Housing Council and Research Institute for Housing America, 06 June 2011. Web. 24 Mar. 2012. .