Connect with us

Economics

How healthy is the state of US homeownership?

The average age of first-time homebuyers in 2019 was 32, and the number of Americans in the range of 25-31 years was massive.
The post How healthy is the…

Published

on

Homeownership in America was a dream that became a nightmare for some during the financial crisis, and then became a hot topic of conservation for the last several years. We’ve got fresh data on homeownership — how does it look today? It seems perfectly right to me if you believe in demographics, affordability and credit profiles.

In the previous expansion, I always stressed that housing would have its weakest recovery from 2008 to 2019. Part of the reason homeownership rate fell during that time was that when people lose their homes legally, they are taken off the homeownership percentage. We had a lot of deleveraging that needed to occur in those years, and it took time. However, it’s 2022, so let’s look at the state of homeownership in America today and why it still looks right to me.

In 2019 I wrote: “Early in this economic cycle, one of the more controversial calls I made was that the homeownership rate would bottom at 62.2% – 62.7% in this cycle (2008–2019). This prediction was based on three facts: First, demographics during this period supported renting, not home buying. Our demographics were either too young or too old to be in the market to purchase homes. 

“Second, over 8 million homeowners were delinquent on their mortgages, and once they lost their home, they would join the ranks of renters. Third, home-ownership and purchase applications were high and could not be sustained at that level with the weaker demographics for homeownership and no exotic loans to boost demand.”

The homeownership rate never got down to the 62.2% – 62.7% range like I thought it would in the previous expansion. The lowest we got was 62.9% and we have been rising since then.

The first-quarter homeownership data is now out, and after the crazy, unrealistic rise during COVID-19, that data has come down to a level that looks about right to me.

From Census: The homeownership rate of 65.4 percent was not statistically different from the rate in the first quarter 2021 (65.6 percent) and the fourth quarter 2021 (65.5 percent).

Part of my 2019 forecast for the next decade is that I believe the target rate goal for homeownership should be 66.21%. I don’t put any serious weight on the spike we had during COVID-19; this data line is usually very slow-moving, so like most COVID-19 economic data, put a giant asterisk on it and move on. Below is what I wrote back in 2019.

As I noted in 2019: “In the last few years, some pundits have been saying that expecting ownership to stay at  62.2% was too bullish. Today, we are less than a year away from the end of this cycle, and the homeownership rate has not gone below 62.2 %. The lowest rate we have seen so far is 62.9%. Now, I am going to make another controversial forecast. I believe the homeownership rate can get back to 66.21% at some point in the years 2022-2026.”

These were the reasons I gave back then:

1. The median age for first-time homebuyers is now 32, and the number of Americans in the range of 25-31 years is massive.

2. Boomers are staying in their homes longer, so they are remaining homeowners.

3. The loan profile of buyers during the post-2010 expansion is excellent, so when the next job loss recession happens, we won’t lose as many homeowners (compared to what occurred after the Great Recession).

As you can see from the third point, the credit profiles of American homeowners were excellent in 2019. Who knew this would get tested so sharply in a global pandemic with forbearance programs in 2020 and 2021! Up for the challenge, I created the phrase the forbearance crash bros, knowing that the housing crash addicts in America lack a financial credit profile risk analysis background.

It was an easy layup for me to state that forbearance was never going to be the collapse of the U.S. housing market like these bearish Americans and foreign citizens were screaming about in 2020 and 2021. This was a significant victory for the United States of America, our people against the American bears.

As you can see below, the cash flow of U.S. households was and is still outstanding. Loans in U.S. are very dull, which is a good thing, and this won’t change anytime soon because we have made American mortgage debt great again.






This is important because, without a credit risk foreclosure or short sale, the homeownership rate uptrend will be more stable because we haven’t had a mortgage credit boom from 2014 to 2022. It was always slow and steady, and that is precisely how we should be dancing with consumer debt. The market of 2002-2005 not only had an explosion in debt growth, but the debt structures themselves were also very exotic.



Going back to point No. 1 above, I noted that the average age of first-time homebuyers in 2019 was 32, and that the number of Americans in the range of 25-31 years was massive.

In contrast, the demographics in 2010 weren’t the best for real growth in mortgage debt and demand, as that cohort was only aged 19-24 — they were too young to be buying homes. Millions of people buy houses each year, but our substantial young demographic patch would have to rent first before they got to their home-buying age in more significant numbers.


Fast forward to 2020, and currently, the most prominent housing demographic patch in America is ages 28-34. So you can see why housing demand has been stable and higher than what we saw from 2008 to 2019. This extra kick in demand, which I always refer to as replacement buyers, looks right to me. This is not a result of speculative demand, just more Americans running into the first-time homebuyers’ median age of 33.

We Americans aren’t that complicated. We rent, date, mate, get married and typically 3.5 years after marriage we have kids, which is when we don’t tend to live in apartments, condos, or townhomes. We tend to buy single-family homes, raise our kids till they grow up, and then it’s their turn.

The one considerable risk for housing in the years 2020-2024 is that if demand picks up as it has, inventory breaks down to unhealthy levels. This has already occurred, and my 23% home-price growth cumulative level that I had targeted for 2020-2024 has been smashed in just two years. On top of that, in 2022, inventory got worse, and we are now in a savagely unhealthy year of home-price growth.



I have stated many times that the one big risk to my goal of total home sales levels of 6.2 million every year from 2020-to 2024 would be from home-price growth that rose too fast, and then we got a mortgage rate spike, which is what we are dealing with now.

The homeownership rate looks right today, and it’s on better footing than the rise we saw in the early 2000s. Families after 2010 have been sitting pretty in their homes with a fixed debt product and hedged versus inflation. Since the American homeowner looks excellent on paper today, my forecast call for 2022-2026 of a 66.21% homeownership rate should come true. If it doesn’t, affordability won the battle versus demographics, keeping more people from owning homes.

No matter what happens, the American homeowners who bought homes over the last decade are in great shape, and they’re living the American dream. And this time, no credit risk blow up nightmare is waiting around the corner — just ask the forbearance crash bros how their housing collapse call for 2021 went.

The post How healthy is the state of US homeownership? appeared first on HousingWire.

Read More

Continue Reading

Economics

Global IT Consulting Sourcing and Procurement Report with Pandemic Impact Analysis, Supplier Evaluation and Price Trends | SpendEdge

Global IT Consulting Sourcing and Procurement Report with Pandemic Impact Analysis, Supplier Evaluation and Price Trends | SpendEdge
PR Newswire
NEW YORK, July 3, 2022

Over 200 Forbes 2000 companies rely on our actionable insightsMore than 100 CPOs…

Published

on

Global IT Consulting Sourcing and Procurement Report with Pandemic Impact Analysis, Supplier Evaluation and Price Trends | SpendEdge

PR Newswire

  • Over 200 Forbes 2000 companies rely on our actionable insights
  • More than 100 CPOs and 500 category managers use our insights daily
  • SpendEdge has the fastest growth rate in number of reports and client base

NEW YORK, July 3, 2022 /PRNewswire/ -- The IT Consulting market size is expected to grow by USD 131.35 Billion by 2025, at a Compound Annual Growth Rate (CAGR) of 9.19% during the forecast period. To know more about this market.

Request For a Free Sample Report

IT Consulting Market Analysis

Analysis of the cost and volume drivers and supply market forecasts in various regions are offered in this IT Consulting research report. This market intelligence report also analyzes the top supply markets, market opportunities, challenges and the critical cost drivers that can aid buyers and suppliers devise a cost-effective category management strategy.

The report provides insights on the following information:

  • Regional spend dynamism and factors impacting costs
  • The total cost of ownership and cost-saving opportunities
  • Supply chain margins and pricing models
  • Competitiveness index for suppliers
  • Market favorability index for suppliers
  • Supplier and buyer KPIs

Get detailed insights on the COVID-19 pandemic crisis and recovery analysis of IT Consulting Market

www.spendedge.com/report/it-consulting-services-market-procurement-research-report

Related Reports on Professional Services Market:

Detect blind spots in your revenue decisions by analyzing interconnected unknowns around the "IT Consulting Market."

Report Metrics

Details

Base year considered

2021

Forecast period

2021 - 2025

Forecast units

USD Billion

Geographies covered

North America, South America, Europe, Middle East and Africa, and APAC

Leading IT Consulting suppliers

Deloitte Touche Tohmatsu Ltd., PricewaterhouseCoopers International Ltd., and Ernst & Young Global Ltd.

Top Pricing Models

Flat-fee model, hourly rate model, and cost-plus model

This procurement report answers help buyers identify and shortlist the most suitable suppliers for their IT Consulting Market requirements following questions:

  • Am I engaging with the right suppliers?
  • Which KPIs should I use to evaluate my incumbent suppliers?
  • Which supplier selection criteria are relevant for?
  • What are the workplace computing devices category essentials in terms of SLAs and RFx?

Table of Content

  • Executive Summary
  • Market Insights
  • Category Pricing Insights
  • Cost-saving Opportunities
  • Best Practices
  • Category Ecosystem
  • Category Management Strategy
  • Category Management Enablers
  • Suppliers Selection
  • Suppliers under Coverage
  • US Market Insights
  • Category scope

Appendix

About SpendEdge:

SpendEdge shares your passion for driving sourcing and procurement excellence. We are the preferred procurement market intelligence partner for 120+ Fortune 500 firms and other leading companies across numerous industries. Our strength lies in delivering robust, real-time procurement market intelligence reports and solutions.

Contact
SpendEdge
Anirban Choudhury
Marketing Manager
Ph No: +1 (872) 206-9340 
https://www.spendedge.com/contact-us

View original content to download multimedia:https://www.prnewswire.com/news-releases/global-it-consulting-sourcing-and-procurement-report-with-pandemic-impact-analysis-supplier-evaluation-and-price-trends--spendedge-301579152.html

SOURCE SpendEdge

Read More

Continue Reading

Spread & Containment

Visualizing A Decade Of Population Growth And Decline In US Counties

Visualizing A Decade Of Population Growth And Decline In US Counties

There are a number of factors that determine how much a region’s population…

Published

on

Visualizing A Decade Of Population Growth And Decline In US Counties

There are a number of factors that determine how much a region’s population changes.

If an area sees a high number of migrants, along with a strong birth rate and low death rate, then its population is bound to increase over time. On the flip side, as Visual Capitalists Nick Routley details below, if more people are leaving the area than coming in, and the region’s birth rate is low, then its population will likely decline.

Which areas in the United States are seeing the most growth, and which places are seeing their populations dwindle?

This map, using data from the U.S. Census Bureau, shows a decade of population movement across U.S. counties, painting a detailed picture of U.S. population growth between 2010 and 2020.

Counties With The Biggest Population Growth from 2010-2020

To calculate population estimates for each county, the U.S. Census Bureau does the following calculations:

      A county’s base population → plus births → minus deaths → plus migration = new population estimate

From 2010 to 2020, Maricopa County in Arizona saw the highest increase in its population estimate. Over a decade, the county gained 753,898 residents. Below are the counties that saw the biggest increases in population:

Phoenix and surrounding areas grew faster than any other major city in the country. The region’s sunny climate and amenities are popular with retirees, but another draw is housing affordability. Families from more expensive markets—California in particular—are moving to the city in droves. This is a trend that spilled over into the pandemic era as more people moved into remote and hybrid work situations.

Texas counties saw a lot of growth as well, with five of the top 10 gainers located in the state of Texas. A big draw for Texas is its relatively affordable housing market. In 2021, average home prices in the state stood at $172,500$53,310 below the national average.

Counties With The Biggest Population Drops from 2010-2020

On the opposite end of the spectrum, here’s a look at the top 10 counties that saw the biggest declines in their populations over the decade:

The largest drops happened in counties along the Great Lakes, including Cook County (which includes the city of Chicago) and Wayne County (which includes the city of Detroit).

For many of these counties, particularly those in America’s “Rust Belt”, population drops over this period were a continuation of decades-long trends. Wayne County is an extreme example of this trend. From 1970 to 2020, the area lost one-third of its population.

U.S. Population Growth in Percentage Terms (2010-2020)

While the map above is great at showing where the greatest number of Americans migrated, it downplays big changes in counties with smaller populations.

For example, McKenzie County in North Dakota, with a 2020 population of just 15,242, was the fastest-growing U.S. county over the past decade. The county’s 138% increase was driven primarily by the Bakken oil boom in the area. High-growth counties in Texas also grew as new sources of energy were extracted in rural areas.

The nation’s counties are evenly divided between population increase and decline, and clear patterns emerge.

Pandemic Population Changes

More recent population changes reflect longer-term trends. During the COVID-19 pandemic, many of the counties that saw the strongest population increases were located in high-growth states like Florida and Texas.

Below are the 20 counties that grew the most from 2020 to 2021.

Many of these counties are located next to large cities, reflecting a shift to the suburbs and larger living spaces. However, as COVID-19 restrictions ease, and the pandemic housing boom tapers off due to rising interest rates, it remains to be seen whether the suburban shift will continue, or if people begin to migrate back to city centers.

Tyler Durden Sat, 07/02/2022 - 21:00

Read More

Continue Reading

Economics

The Best Cities to Buy a Starter Home

Competition for starter homes is intense. What’s a buyer to do? Look to these cities to break into the real estate market.

Published

on

Competition for starter homes is intense. What's a buyer to do? Look to these cities to break into the real estate market.

Who wants to buy a home? A lot more people than there are homes to buy, and the outlook for first-time buyers is particularly grim.

About 26 million Americans plan to buy a home in the next 12 months, but just 5-6 million homes were sold in each of the past five years, according to a NerdWallet survey conducted in December 2021.

Millennials, aged about 26-41 years, are the largest group trying to buy homes, about 37%, according to the National Association of Realtors, and first-time buyers made up 31% of all home buyers. The supply of starter homes decreased by more than half from 2017-2021, according to an analysis by Realtor.com, which defined starters as single-family homes, condos, and townhomes under 1,850 square feet.

While median monthly asking rent in the U.S. surpassed $2,000 in May, the national median sale price topped $431,000, according to Redfin data.

And it’s not just low inventory and high prices, the competition is fierce for first-time homebuyers. Urban renters headed for the suburbs during the pandemic to compete for those entry-level homes, baby boomers looking to downsize also go after smaller properties, and to make matters worse, first-time home buyers must compete with investors who pay cash to fix and flip homes. These cash-rich flippers now make up about 10% of homebuyers

Lastly, builders have largely been unable to offset the decline in starter homes.

For the house hunter who still has the moxie to try, turn to this list of cheapest cities to buy a home. To find the cheapest places for homebuyers and the best places for starter homes, StorageCafe, an online platform that provides storage unit listings across the nation, looked at data from 108 U.S. cities with populations ranging from 90,000 to 8 million. The metrics include property values, number of sales between 2015 and 2021, housing affordability, cost of living, unemployment rate, homebuyers’ ages, the ratio of renters to owners, income levels, FHA lending limits and average mortgage rates. They scored each city on these metrics then ranked them based on their potential with regard to starter homes.

Here are the best cities for first-time homebuyers:

1. Fort Wayne, Ind.

  • Median property value: $113,144
  • Cost of living index: 87
  • Homebuyers' age: 35
  • 2021 average mortgage rate: 3.14%

The analysis used average mortgage rates from 2021, and rates have since gone up, hovering near 6% in June, but last year's rates might still give you a sense of where rates tend to be lower.

2. Columbia Md.

  • Median property value: $264,055
  • Cost of living index:106
  • Homebuyers' age: 39
  • 2021 average mortgage rate: 3.00%

3. Pittsburgh

  • Median property value: $170,042
  • Cost of living index:104
  • Homebuyers' age: 38
  • 2021 average mortgage rate: 3.03%

Shutterstock

4. Fishers, Ind.

  • Median property value: $258,679
  • Cost of living index: 92
  • Homebuyers' age: 38
  • 2021 average mortgage rate: 3.14%

5. Columbus, Ohio

  • Median property value: $164,229
  • Cost of living index: 92
  • Homebuyers' age: 39
  • 2021 average mortgage rate: 3.16%

aceshot1 / Shutterstock

6. Carmel, Ind.

  • Median property value: $244,670
  • Cost of living index: 104
  • Homebuyers' age: 40
  • 2021 average mortgage rate: 3.01%

7. St. Paul, Minn.

  • Median property value: $286,151
  • Cost of living index: 92
  • Homebuyers' age: 38
  • 2021 average mortgage rate: 3.14%

8. Cary, N.C.

  • Median property value: $308,611
  • Cost of living index: 94
  • Homebuyers' age: 43
  • 2021 average mortgage rate: 3.02%

9. Manchester, N.H.

  • Median property value: $276,257
  • Cost of living index: 111
  • Homebuyers' age: 40
  • 2021 average mortgage rate: 3.03%

10. Minneapolis

  • Median property value: $288,926
  • Cost of living index: 105
  • Homebuyers' age: 40
  • 2021 average mortgage rate: 3.01%

11. Nashville, Tenn.

  • Median property value: $318,046
  • Cost of living index: 93
  • Homebuyers' age: 39
  • 2021 average mortgage rate: 3.02%

f11photo / Shutterstock

12. Bakersfield, Calif.

  • Median property value: $216,063
  • Cost of living index: 102
  • Homebuyers' age: 40
  • 2021 average mortgage rate: 3.04%

13. Arvada, Colo.

  • Median property value: $476,672
  • Cost of living index: 114
  • Homebuyers' age: 39
  • 2021 average mortgage rate: 3.00%

14. Alexandria, Va.

  • Median property value: $432,703
  • Cost of living index: 137
  • Homebuyers' age: 40
  • 2021 average mortgage rate: 2.99%

Shutterstock

15. Centennial, Colo.

  • Median property value: $444,747
  • Cost of living index: 114
  • Homebuyers' age: 39
  • 2021 average mortgage rate: 3.00%

16. Denver

  • Median property value: $505,777
  • Cost of living index: 113
  • Homebuyers' age: 39
  • 2021 average mortgage rate: 3.00%

17. Raleigh, N.C.

  • Median property value: $279,304
  • Cost of living index: 94
  • Homebuyers' age: 43
  • 2021 average mortgage rate: 3.02%

18. Germantown, Md.

  • Median property value: $261,511
  • Cost of living index: 157
  • Homebuyers' age: 39
  • 2021 average mortgage rate: 3.00%

19. St. Petersburg, Fla.

  • Median property value: $283,684
  • Cost of living index: 96
  • Homebuyers' age: 53
  • 2021 average mortgage rate: 3.11%

20. Lakewood, Colo.

  • Median property value: $380,165
  • Cost of living index: 114
  • Homebuyers' age: 39
  • 2021 average mortgage rate: 3.00%

21. Aurora, Colo.

  • Median property value: $360,542
  • Cost of living index: 114
  • Homebuyers' age: 39
  • 2021 average mortgage rate: 3.00%

22. Boca Raton, Fla.

  • Median property value: $280,104
  • Cost of living index: 116
  • Homebuyers' age: 51
  • 2021 average mortgage rate: 3.11%

23. Modesto, Calif.

  • Median property value: $319,328
  • Cost of living index: 119
  • Homebuyers' age: 39
  • 2021 average mortgage rate: 3.04%

Shutterstock

24. Chandler, Ariz.

  • Median property value: $388,450
  • Cost of living index: 103
  • Homebuyers' age: 51
  • 2021 average mortgage rate: 3.12%

Shutterstock

25. Las Vegas

  • Median property value: $265,170
  • Cost of living index: 107
  • Homebuyers' age: 50
  • 2021 average mortgage rate: 3.11%

26. Washington, D.C.

  • Median property value: $623,135
  • Cost of living index: 157
  • Homebuyers' age: 40
  • 2021 average mortgage rate: 4.90%

27. Scottsdale, Ariz.

  • Median property value: $478,609
  • Cost of living index: 103
  • Homebuyers' age: 51
  • 2021 average mortgage rate: 3.12%

28. Spokane, Wash.

  • Median property value: $300,881
  • Cost of living index: 107
  • Homebuyers' age: 44
  • 2021 average mortgage rate: 3.06%

29. Peoria, Ariz.

  • Median property value: $373,588
  • Cost of living index: 103
  • Homebuyers' age: 51
  • 2021 average mortgage rate: 3.12%

30. Gilbert, Ariz.

  • Median property value: $409,324
  • Cost of living index: 103
  • Homebuyers' age: 51
  • 2021 average mortgage rate: 3.12%

31. Portland, Ore.

  • Median property value: $484,475
  • Cost of living index: 132
  • Homebuyers' age: 44
  • 2021 average mortgage rate: 3.08%

Check out how all 108 cities ranked and see the methodology for this study at StorageCafe.com

Read More

Continue Reading

Trending