Housing industry says demand is up, prices stable
Today's column qualifies as a hodgepodge, a series of snapshots of the housing market as we head into spring selling season.
Today's column qualifies as a hodgepodge, a series of snapshots of the housing market as we head into spring selling season.
First is this from Edward Pinto, codirector of the American Enterprise Institute's International Center on Housing Risk, who says first-time buyers continued to increase their presence in the market, with both the first-time buyer share and volume up considerably in December from levels a year earlier.
That continues a 14-month trend, he said.
"Strong demand, in combination with shortness of supply, is driving home prices up faster than incomes and inflation," Pinto reported.
Home prices continued to be relatively stable as 2015 drew to a close, remaining flat in November, said Yanling Mayer, housing economist and research director of mortgage technology firm FNC.
"Despite recent months' more upbeat data on new home sales and residential construction, prices have been relatively stable since August, with month-to-month momentum showing no significant gains, neither decelerating nor accelerating rapidly," Mayer said.
Spending on residential remodeling will continue to trend upward, the National Association of Home Builders reported. The organization forecast that remodeling spending for owner-occupied single-family homes will increase 1.1 percent in 2016 over 2015, and 1.9 percent in 2017.
"Census estimates now indicate that improvements to owner-occupied housing increased at a real rate of 1.3 percent last year, which is consistent with NAHB's expectations and our measure of remodelers' sentiment," said Paul Emrath, the group's vice president for survey and housing-policy research.
The builders' organization is projecting 1.26 million total housing starts in 2016, up 13.4 percent from a projected 1.11 million starts in 2015.
Single-family-home production is expected to reach 840,000 units this year, an 18 percent increase from a projected tally of 711,000 units in 2015.
Using 2000-2003 as a benchmark, when single-family starts averaged 1.34 million units on an annual basis, NAHB said, the ongoing housing recovery will see single-family starts steadily climb from 55 percent of normal production at the end of the third quarter 2015 up to 87 percent of normal by the end of 2017.
I suggest taking these predictions from the housing industry with all the necessary precautions.
Commercial real estate research firm Delta Associates reported that the stabilized vacancy rate for Class A apartments in the Philadelphia metro area declined 110 basis points, to 3.3 percent, in fourth quarter 2015, compared with 4.4 percent in the same period of 2014.
Vacancy dropped 290 basis points in the city itself, from 5.7 percent in December 2014 to 2.8 percent in December 2015, while suburban Pennsylvania vacancy fell 50 basis points to 3.9 percent, from 4.4 percent in December 2014. Vacancy in southern New Jersey went up 40 basis points, from 2.2 percent last year to 2.6 percent.
Finally, income inequality is increasing in large U.S. cities and metropolitan areas, primarily because of falling incomes for the poorest households, says a new report from the Brookings Metropolitan Policy Program.
Low-income residents of more unequal places face a greater housing financial burden than those who live in areas with less income disparity, the report stated.
In the most unequal cities, low-cost rental units represent on average 52 percent of low-income households' income, compared with 40 percent in the most equal cities, it said.
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