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Posts Tagged ‘household formation’

Meeting the Demand of a Rising Singles Population

April 22nd, 2015 Comments off

modular  panormaic interests   earth techling creditSince 1940, the number of people living alone in the U. S. has grown from seven percent to over 25 percent, as washingtonpost informs MHProNews. But our housing stock is built for families: Two bedroom starter homes with one bath, three-bedroom family homes with two bathrooms, and apartments designed for nuclear families.

The trend is especially prevalent in large cities: In 2010 New York, Austin and Denver almost 57 percent of adults were single, and in Washingon, D.C., that number is 71 percent. The result is many singles in large urban areas are living with unrelated adults, when they would prefer their own space, or living in a space larger than they need, paying more than they want, because there are not enough efficiencies or studios to meet the need.

The rise in the singles population may call for more micro housing units, modular apartments like those being built in New York City, as MHProNews has documented, which are no larger than 400 square feet. Some existing urban regulations require habitable space to be of particular square footage, to regulate density, which may call for legal changes and, perhaps, challenges.

Demographics and social norms change more quickly than the housing stock. Currently, apartment rents have been rising, leading to a near meteoric rise in apartment building construction. Is this the result of stagnating wages that might be preventing household formation, as well as tight credit that staves off home buyers? If wages rise, will household formation and marriages increase? And what then of the micro modular units? Perhaps as the population ages, senior singles may then occupy them. ##

(Photo credit: earthtechling/Panormaic Interests–small modular apartment)

matthew-silver-daily-business-news-mhpronews-com  Article submitted by Matthew J. Silver to Daily Business News-MHProNews.

Millennials Continue Living with Mom & Dad

September 19th, 2014 Comments off

aarp children eturn home   david sacks getty imagesThe homeownership rate among young adults ages 18-34 has fallen to a new low, 13.2 percent, as Millennials continue to live in their parents’ basements. In 2014, according to Census Bureau data compiled by trulia.com, 31.1 percent of this age group lived with their parents, a slight decline from 31.2 percent a year prior. As cnnmoney.com reports, Trulia Chief Economist Jed Kelko says those who do move out are not forming new households, they are moving in with someone else. The Millennials who rent or own their own home dropped from 36.9 percent one year ago to 36.6 percent this year. Instead of an estimated 1.2 million households that might have formed last year, the count was only 425,000. As MHProNews pointed out a year ago, Sept. 19, 2013, a survey in June of that year revealed that 94 percent of renters 18-34 still plan to own a home someday, although rental agents report occupants are older, more often single and staying longer than they have in past years. “Thus, [the] Census data show that the housing market is still struggling to recover,” wrote Kolko. ##

(Photo credit: David Sacks/Getty Images–children return home)

MBA’s David Stevens: Home Ownership Financing must Change

September 8th, 2014 Comments off

mortgage  housingwire creditNoting the current housing market scenario is not meeting expectations most analysts predicted a year ago, Mortgage Bankers Association (MBA) CEO and President David Stevens says the changing demographic in the U. S. is going to require changes in the home financing market. “If you look at existing housing stock in this country, 70 percent of it is occupied by white non-Hispanics,” Stevens said. “If you look over the next decade, in terms of new housing stock being created and new household formation, only about a third of that is going to be white non-Hispanic, and the remainder is going to be minority. We’re moving to a country that is going to be majority minority. But in terms of home sales, it is going to be vastly majority minority by about two-thirds.”

According to nationalmortgageprofessional.com, he says multi-generational households with members working different, sometimes multiple, jobs, and offshore sources of funds will result in financing new types of homeownership. This demographic change may favor the affordable housing market, which could benefit  manufactured housing. Stevens says the percentage of 30 year-olds with mortgage debt is down ten percent, which MHProNews understands is considered a significant dent in housing recovery. ##

(Editor’s Note: An exclusive by David Stevens to MHProNews is found, linked here.)

(Image credit: housingwire.com)

Missing Households

February 19th, 2014 Comments off

According to ycharts.com, on average about one million new households are created each year, but since the recession that has dropped to 500,000, spurring trulia.com to say there are “2.4 million” missing households. In his 2011 Berkshire Hathaway shareholders letter, Warren Buffett says, “People may postpone hitching up during uncertain times, but eventually hormones take over. And while ‘doubling-up’ may be the initial reaction of some during a recession, living with in-laws can quickly lose its allure.” While he has made many correct statements, earning billions in the process, this may not be one of them: The number of young adults living with their parents is rising—51 percent of 18-23 year-olds, and 14 percent of those 14-34 years old, live with their parents and have learned cohabitation skills.

Buffett might be concerned because of his investments in housing-related businesses, including Clayton Homes, the largest producer of manufactured homes in North America. While Clayton’s revenue is up 84 percent for the first nine months of this fiscal year, it’s because of increased interest income and lower loan loss provisions—home sales are up only nine percent. While Buffett and others are correct in saying there is pent-up demand for household formation, marriage rates are at their lowest in over 100 years, and the average age of a first marriage is at a century-plus high. Many people are renting and sharing instead of buying, as dailyfinance.com informs MHProNews.com. While the recession may be over, as unemployment has fallen and the stock markets keep going higher, a recession can hurt wages for years afterward. A study by Yale University reports wage losses for those who graduate during a recession range from one percent to 13 percent per year, which adds up to $80,000 over 20 years. With real income stagnant, those children may be living in mom and dad’s basement for several more years. ##

(Image credit: Fotosearch.com–homeownership fading)

Housing Market Continues to Support Economic Recovery

December 24th, 2013 Comments off

The Commerce Department reported that sales of durable goods spiked 3.2 percent in November, well above the two percent economists had predicted. A measure of planned business spending for capital goods marked its biggest gain in nearly a year in November, which indicates growth into next year. While sales of new homes fell slightly in Nov., likely due to rising mortgage rates, they hit a five year high in October, as the housing market continues to boost the economic recovery. Although applications for residential mortgages dropped for a second week in a row, homes sales are expected to increase next year along with employment, which will in turn boost household formation activity. MHProNews has learned median home prices rose over ten percent from a year ago to $270,900. “From consumer spending to employment and trade, the foundations appear to be in place for sustained and strong economic growth in 2014,” according to foxbusiness.com.

(Image credit: globest.com)

NAHB sees Roses through 2015

October 3rd, 2013 Comments off

Despite the government shutdown and looming debt ceiling debate, the National Association of Home Builders (NAHB) forecasts growth of the housing industry will continue through 2015 although at a slightly slower pace, according to economists gathered for the NAHB’s Fall 2013 Construction Forecast Webinar. Noting the formation of households dropped from a high of 1.4 million annually during the housing boom to 500,000 during the Great Recession, it has now climbed back to 700,000. Says NAHB Chief Economist David Crowe, “From the standpoint of GDP growth, housing has been a plus, growing at two, three and four times the rate of the rest of the economy in recent quarters.” NAHB forecasts 924,000 housing starts this year, 629,000 of which are single-family homes, and that number will rise above the million mark in 2015. Additionally, as MHProNews has learned, NAHB predicts multifamily housing will rise 20 percent this year to 296,000 units and an added ten percent in 2014 to 326,000 units.

(Photo credit: comstockpremium)

Support for Governmental Backstop for Mortgage Financing Remains

September 18th, 2013 Comments off

A “future-of-housing” forum sponsored by the National Association of Home Builders (NAHB) in Washington, D. C., with housing industry experts and Senators Bob Corker (R-TN), Jon Tester (D-MT) and Johnny Isakson (R-GA) indicated most participants agree the private sector should play a greater role in mortgage financing, but with some level of government support to ensure stability and liquidity. Peter Wallison of the American Enterprise Institute says lowering the conforming limits of the government sponsored enterprises (GSEs) will make a path for the private sector to take that business. “If you simply made those changes and authorized the withdrawal of the GSEs, you would find we would gradually move to a completely private system, which is where I think we should be going,” he states. Others say during a tough time for the housing industry private credit would simply disappear, and that the Federal Housing Authority (FHA) saved the day during the recent crisis. Sens. Corker and Tester are among ten bipartisan sponsors of the Housing Finance Reform and Taxpayer Protection Act (S. 1217), which provides a federal backstop to mortgage lending. Isakson says every provision in the Tax Code must be thoroughly examined to determine if it is viable in the long term. Eric Belsky, managing director of the Joint Center for Housing Studies at Harvard University says household formation is particularly slow, as many over 30 children remain with their parents due to economic necessity. NAHB Chief Economist David Crowe says the housing market is about half-way back, as credit remains tight and buildable lots are scarce. On the topic of tax reform, several housing experts agree the mortgage interest deduction plays an important role in shaping housing demand. NAHB Economist Robert Dietz says, “The nonpartisan Tax Foundation found that if we repealed the mortgage interest deduction and lowered marginal tax rates then GDP would decline by $100 billion annually,” plus it would cause home values to decline. AS MHProNews learned, he added, “Considering it only takes a 6 percent drop in home values to wipe out $1 trillion in household wealth, the economic consequences could be significant.”

(Image credit: firstbanktrust.com)

Housing Recovery in Phase 3, Market 64% Back To Normal

August 29th, 2013 Comments off
joe-kolko-trulia-chief-economist-credit-forbes-posted-manufactured-home-daily-business-news-Trulia’s Chief Economist Joe Kolko revealed the latest findings from their Housing Barometer. Kolko’s findings are that the recovery has entered a new phase as mortgage rates rise and inventory expands. While prices and existing-home sales are nearing normal, new construction and sales are far from their pre-bust peak. Forbes tells MHProNews that “Each month, Trulia’s Housing Barometer charts how quickly the housing market is moving back to “normal.” We summarize three key housing market indicators: construction starts (Census), existing home sales (NAR), and the delinquency-plus-foreclosure rate (LPS First Look). For each indicator, we compare this month’s data to (1) how bad the numbers got at their worst and (2) their pre-bubble “normal” levels.” It seems the fourth phase, described as when young adults finally start moving out of parents’ homes and begin to fuel new household formation, is still off in the distance. ##

(Photo Credit: Trulia’s Joe Kolko/Forbes)

Young Adults Postponing Household Formation

August 6th, 2013 Comments off

With Millennials (ages 18-31) continuing to have problems finding suitable work, 36 percent of them lived in their parents home in 2012, an increase of two percent from 2009, according to the Pew Research Center’s analysis posted in wsj.com. For some 25-30 years, the percentage has hovered around 30 percent, but since the Great Recession the number has been climbing. Some have enrolled in college, and many of those live in their parents’ home to save money; others living at home have postponed major life events such as marriage, which forestalls new household formation. Based on data from the Census Bureau, MHProNews has learned some adult children who are working continue to live at home to save money. Often, they cannot afford to live on their own.

(Photo credit: David Sacks/Getty Images)

Immigration Reform Could be Boon to Housing Industry

May 21st, 2013 Comments off

According to inman, estimates released by the National Association of Hispanic Real Estate Professionals (NAHREP) say proposed immigration reform would result in the purchase of 3,000,000 homes by Hispanics, generating over $500 billion in home sales. An additional $233 billion in commissions, fees and spending connected to home-ownership would further add to the economy. A report released by (NAHREP) states Hispanic homeowners increased 58 percent from 2000 to 2012, from 4.24 million to 6.69 million, as compared to five percent net growth for the remainder of the nation’s population. The report also suggests Hispanics accounted for 51 percent of all household formation in 2012, and in 2010, 10.4 percent of all U. S. homeowners were Hispanic. As MHProNews has learned, NAHREP President Juan Martinez says, “Foreign-born householders have a high value and strong desire for homeownership. They have been here in our midst for years, working and participating in our economy. Legitimizing them through immigration reforms would finally give them the access and the confidence to buy homes.”

(Image credit: firstbanktrust)