A 44 page tome chocked full of data has been released by Harvard University’s Joint Center for Housing Studies. In their annual State of the Nation’s Housing report, Harvard’s JCHS doesn’t reveal anything earth-shattering. Crunching through the data from 2008 shows that the housing market . . . pretty much stinks.
Here are some of the “highlights”:
- Sales of existing single-family homes were down 30 percent last year from the 2005 level to 4.35 million, their lowest level since 1997.
- New home sales showed a record-breaking plunge of more than 60 percent from 2005 to 2008. Actual declines were even larger because cancellations, which are not backed out of reported sales, rose over the period.
- Housing starts were down by more than 30 percent for the year in 2008 and more than 50 percent from the 2005 level.
- The national homeownership rate slid from its peak in 2004 to 67.3 percent in the first quarter of 2009, erasing all of the gains since 2000.
- Measured on a monthly basis and adjusted for inflation, the national median home price fell by 29.8 percent from October 2005 to January 2009.
- According to the Mortgage Bankers Association, at least 3.2 million homeowners entered foreclosure in 2007 and 2008, and an additional 600,000 entered foreclosure in just the first quarter of 2009.
- Foreclosure rates in California, Arizona, Nevada, and Florida surged from less than 0.9 percent at the start of 2007 to 5.9 percent by the end of 2008. According to the Mortgage Bankers Association, by the first quarter of 2009 there were nearly 800,000 outstanding loans in foreclosure in just those four states, amounting to 46 percent of the national total.
And it goes on and on.
The Bright Side?
The “echo boomers” ”“ children of the baby boomers ”“ are beginning to reach home buying age. A lot of baby boomers had a lot of children, and these echo boomers are beginning to enter the workforce and could help fuel a revival of the housing market.
Additionally we are beginning to see signs of recovery, or at least stabilization, across much of the Phoenix real estate market. Sales are up, inventory is down, and prices are stabilizing (generally speaking). Some have even “called the bottom” and some continue to proclaim “now is a great time to buy”. And it may indeed be, for some people in some circumstances. I’ll stand pat in my assessment that there is never a right time to buy for everyone.
As mentioned on this blog countless times in the past, it is important to understand that real estate is local ”“ very local. Taking reams of data and aggregating them into national-level metrics and indexes can be somewhat misleading if what you are really interested in is what is happening in Neighborhood X. Even aggregating across a metro area the size of Phoenix often won’t tell the true story at the “hyper local” level. Yes, national/metro trends are important, but they do not tell the full story.
If you like data, you’re going to love Harvard’s report. Here is where to find it:
The full report, “The State of the Nation’s Housing 2009”. (color, PDF)
The black and white version (recommended if you are going to print the report).
State of the Nation’s Housing Fact Sheet (PDF).
State of the Nation’s Housing press release.
Previous “SON” reports (1998 ”“ 2008).