The housing market is a "crapshoot".

 

Karl "chip" case is an economist whose name is synonymous with real estate prices. He is the co-creator of of S & P/Case-Shiller home price indices much watched with Bob Shiller, who won the Nobel Prize in economics last year.

"You have much more negative vibrations in surveys of housing on the home ownership that we ever," case told CNNMoney. "I think that it is because people have washed down. They thought that the housing prices never go down. "This is just bull - you know what."

At the age of 67 cases still vibrates broadband data with the kind of enthusiasm that most people use to recite the words of the popular song on housing. For case, the key metrics to monitor is under construction, a measure of the residential new home construction.

Related: A housing-based Millennium boom happen?

The housing starts figures were 'incredibly regular' 50 years, ranging between 1 million per month (annualized rate) the not so great time and 2 million during peak economic periods.

"Whenever it happened below 1 million in the past, it came right away," said case. Every time except the great recession.

Housing starts dropped below 500,000 for several months in 2009, an unthinkable level. And they have been slow to bounce back. They finally eked above the million in April, but it is not the case, if it's a real turning point.

He calls the market of the real estate 'segmented' these days. It is therefore more a guarantee of real estate prices will go across the country. This occurs only in certain places at certain times.

Karl 'Chip' case - the case of the Case-Shiller index - said only to buy a House for long distances. (Photo courtesy of Wellesley College).

On the demand side of the equation will also be key. Generation y will actually buy houses? Continue to foreign buyers?

"The Chinese come here with millions and billions of dollars, and they want to spend on assets that tend to hold their value. And at least the theory is that housing does. But it is far from what it was in 2004,"case notes.

The case given to first-time homebuyers are familiar to most. Make sure that you can afford the House and don't expect a quick profit.

"If you don't buy it for the long haul, not to buy because there is good chance that you'll have to attend some cycles down." "" But when he goes, it is very well", he said.

Related: Best markets for becoming an owner

Case studied intensively housing. But it is not only an academic. He owns a House too. He still remembered the House, bought in 1976 for $ 54,000, and sold years later for $240,000. Another home in the Boston area, he bought for about $ 375,000 is now worth 1 million.

But same case is not always call trends housing correctly, at least in the short term. The Commission considers that another property that he has lost almost half of its value during the economic downturn. For now, it is now.

Probably his best shot of property, however, is its place of permanent stationing at the federal reserve of Boston - which is close to Fenway Park. It has had since the end of the 1980s and uses it when he goes to see his beloved Boston Red Sox play.

First published: 7 July 2014: 6: 08 et

MBS RECAP: Market Monotony Broken By Geopolitical Events; Big Rally For Bonds

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Today offered a triple or possibly quadruple-whammy for bond markets, almost exclusively in the form of overseas events.  The weakest among these was the notion that yesterday's announcement of new sanctions against Russia was a profound market mover.  While that's technically possible, it wasn't plainly evident in overnight trading.

By the start of the domestic session, bond markets were only in slightly stronger territory.  The next boost was the only domestic consideration today.  June Housing Starts came in much weaker than expected and broke below a trend of growth that had been intact since the beginning of 2011.  Bond markets improved on the data, despite a stronger-than-expected Jobless Claims report. 

Trading proceeded in relatively uneventful fashion until the day's first geopolitical catastrophe unfolded when news hit of a Malaysian airliner being shot down on the Russia/Ukraine border.  this set the tone for the rest of the day as bond markets rallied steadily and stocks moved lower. 

This brought 10yr yields right to the important 2.47% level before the last major geopolitical headline came out.  Just after 3pm, Al-Jazeera reported that Israel launched a major ground/air/sea assault on Gaza.  Market reaction was sporadic, peaking in intensity at 3:15pm, but never really doing anything but carry yields and stocks lower.  Israel confirmed the news at 3:40pm.

As is always the case when it comes to global flights to safe-haven assets, Treasuries outperformed MBS handily.  Even so, MBS weren't completely tuned out from the rally, managing to gain 3/8ths of a point by the end of the day.  This brings Fannie 3.5s to 102-15.

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live. Pricing as of 7/17/14 5:04PMEST Today's Reprice Alerts and Updates 4:09PM  :  Israel Ground Offensive in Gaza Sends Bond Yields Lower Still 2:17PM  :  Ongoing Positive Reprice Potential as Treasuries/MBS Hold Gains 10:08AM  :  Strong Philly Fed Data Reinforces Bounce Toward Weaker Levels 9:37AM  :  Bond Markets Stronger Overnight, and Another Boost From Weak Housing Data Matthew Graham  :  "yeah, it's still pretty sudden. And just because MBS are better positioned to soak up weakness doesn't mean a run to 2.66 in Treasuries wouldn't hurt" Hugh W. Page  :  "Still don't trust this rally just yet. Need some follow through IMO. I think for short timers it's a lock opportunity." Roland Wilcox  :  "MG so timely just shared analogy w/client who inquired about 10yr/MBS relationship" Sung Kim  :  "thank you MG, that really helped" Matthew Graham  :  "conversely, if broader markets lose ground, MBS will have already been lagging behind, and thus potentially not lose ground at the same pace." Matthew Graham  :  "That's what I meant by "slingshot" if broader markets improve." Matthew Graham  :  "when MBS are underperforming, they're like the dog pulling back reluctantly on the leash. Right now it's pretty stretched. If the master continues to walk forward, it could make for a relatively rapid move forward by the dog." Matthew Graham  :  "In this analogy, the "leash" is stretchy " Matthew Graham  :  "Let's begin by recalling an analogy we sometimes use of the 'Master and the Dog.' The overall momentum in bond markets is like the Master. The best benchmark we have for that is 10yr yields, which is why we talk about them so much. MBS are like the dog (and no, there's no deeper meaning here). The master sets the course for where the two will walk but the dog can tug at the leash--either reluctantly or eagerly. " Sung Kim  :  "MG, would you mind expounding on that comment?" Hugh W. Page  :  "That insight is invaluable info" Matthew Graham  :  "The fact that Treasuries are here with MBS having underperformed so consistently for the past 1.5 weeks may set us up for a bit of a slingshot if broader market stays strong, or to better endure weakness if broader markets bounce." Andy Pada, Jr.  :  "the real time chart is such an amazing tool" Andy Pada, Jr.  :  "as horrible the circumstances may be, I was able to lock in a bunch on live pricing at noon. " Discuss the MBS and Mortgage Markets on Our Streaming Dashboard

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Mortgage Rates Hold Steady Despite Market Weakness

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Mortgage rates managed to hold their ground today.  Some lenders were even in slightly better shape, though there was no change on average.  That's somewhat interesting considering the bond markets that most directly affect rates were in slightly weaker shape today.  In short, market movement pointed to higher rates.  So how did they manage to hold steady?

Today's somewhat counterintuitive strength is really the story of yesterday's completely understandable hesitation.  Yesterday was driven by several unexpected and relatively shocking headlines.  While it's not uncommon for bond markets to respond to such events, it's just as likely that the trading levels will bounce back a bit after the first phase of the reaction.  Whether that happens sooner or later, lenders don't perceive such events as having a lasting impact on the bond prices that dictate their rates.

In other words, yesterday's improvements in mortgage rates belied the scale of the market movement.  One additional factor here was that the last push in markets yesterday came too late in the day for many lenders to adjust rate sheets.  So rate sheets never fully reflected the market gains.  That left them in a better position today to soak up a bit of market weakness without any profound effect on rate sheets.

4.125% remains the most prevalently-quoted conforming 30yr fixed rate for top tier scenarios.  When it comes to geopolitical risks, a lot can happen over the weekend.  The baseline scenario is for that 'bounce back' mentioned above, but on the chance the situation in Ukraine or Israel deteriorates further, rates could continue to improve.  We're really at the mercy of the headlines (or lack thereof). The biggest market movements in the near future are likely reserved for the week after next when several important scheduled events occur in the space of 3 days.  We'll discuss that more as it approaches, but that week has a chance to set the tone for the next major rate movement.

Loan Originator Perspective

"No follow through on improvements in pricing today which makes me lean on the side of protecting this pricing now for short term locks before a bounce back higher occurs. Floating loans closing in over 30 days is likely not a big risk but as we get closer to the end of the month the economic data begins to heat up with our first reading on 2nd Quarter GDP on 7/30 followed by the all important Jobs Report on August 1st. Borrowers floating in to this time frame need to stay vigilant and aware of what's going on in the markets by staying in close contact with their loan officer." -Hugh W. Page, Sen. Mortgage Consultant, Capital Partners Mortgage

"If you've floated to this point, I'd certainly wait to see what Monday brings and then cautiously adjust my plan each day moving forward. Mortgages are still trailing a long way behind Treasuries and next week brings about a lot of data that can heavily influence both. Cautiously floating into next week is my plan." -Brent Borcherding, www.brentborcherding.com

"The dust is settling, if only for the moment, after yesterday's frantic action. Biggest concern after rates improve due to geopolitical strife is that the gains can evaporate quickly. With that in mind, folks closing within 30 days may want to take a hard look at today's pricing. Those with longer time frames, and some risk tolerance, might consider floating. Ukraine is not solved, Israel is still in Gaza, etc, so the potential for more incidents is high. Hate to see international drama, but it does often help mortgage rates." Ted Rood, Senior Mortgage Planner, tedroodteam.com

"I favor locking in the recent small gains as I feel they are not likely to stay around. Geopolitical events are reflected in the current market, keeping rates low, but those effects can quickly fade." -Michael Owens, VP of Mortgage Lending at Guaranteed Rate, Inc.

Today's Best-Execution Rates

30YR FIXED - 4.125
FHA/VA - 3.75%
15 YEAR FIXED -  3.375%
5 YEAR ARMS -  3.0-3.50% depending on the lender

Ongoing Lock/Float Considerations

The hallmark of 2014 so far has been a disconcertingly narrow range in rates.  Too many market participants bet on rates going higher in 2014, and markets have punished that imbalance with a paradoxical move lower. As of June, rates were officially lower year-over-year, but that's due to rates' path higher in 2013.  The current path in 2014 remains sideways.  European markets continue to play a nagging role in the background, generally helping rates in the US remain lower than they otherwise might be.  From a wider point of view, we're in limbo, waiting for the first significant move away from the narrow range.  A rally into late May stood a chance to act as this break, but rates have since returned to what were previously the lower limits of the 2014 range. As always, please keep in mind that the rates discussed generally refer to what we've termed 'best-execution' (that is, the most frequently quoted, conforming, 30yr fixed rate for top tier borrowers, based not only on the outright price, but also 'bang-for-the-buck.'  Generally speaking, our best-execution rate tends to connote no origination or discount points--though this can vary--and tends to predict Freddie Mac's weekly survey with high accuracy.  It's safe to assume that our best-ex rate is the more timely and accurate of the two due to Freddie's once-a-week polling method).  Chief Operating Officer, Mortgage News Daily / MBS Live A former originator, Matthew began writing for Mortgage News Daily in 2007, covering a wide range of topics. Seeing a need in the marketplace, his focus increasingly shifted toward relating MBS and broader financial markets for loan originators. ... more

Mortgage rates hold steady despite the weakness of the market

Mortgage rates has managed to maintain their positions today.  Some lenders were even in the form of a little better, although no there was no change in average.  It is kinda interesting considering the bond markets that affect directly the rates were slightly lower shaped today.  In short, market movement made at higher rates.  So, how they has failed to stop?

Today's somewhat paradoxical strength is really the story of to the understandable reluctance of yesterday.  Yesterday has been fueled by several titles quite shocking and unexpected.  It is not uncommon that the bond markets respond to such events, but it is equally likely that the levels of trade will bounce back a bit after the first phase of the reaction.  If this happens sooner or later, lenders do not perceive these events as having a lasting impact on the price of the bonds that dictate their tariffs.

In other words, improvement of mortgage rates yesterday denied the scale of the movement of the market.  An additional factor here was that the last boost in markets yesterday came too late in the day for many lenders adjust rate sheets.  If leaves rate never fully taken into account the market gains.  Which left them in a better position today to soak up a bit of weakness in the market without profound effect on rate sheets.

4,125% rest most commonly cited conforming 30 year fixed rates for higher level scenarios.  When it comes to geopolitical risks, much can happen over the weekend.  The baseline scenario is for that "bounce" mentioned above, but on the chance, as the situation in Ukraine or Israel to deteriorates, rates may continue to improve.  We are really at the mercy of the titles (or lack thereof). The greatest market movements in the near future is probably reserved for next week several important regular events occur in the space of 3 days.  We will discuss that more as he approaches, but this week has a chance to set the tone for the next important rate movement.

Creative lending Perspective

"No follow-up on improvements to today's prices, that makes me look on the side of protecting this pricing now for locks in the short-term before a higher rear rebound occurs." Floating loans more than 30 days of closure is probably not a great risk, but as we get closer to the end of the month the economic data are beginning to warm up with our first reading on second quarter GDP on 7/30, followed by the jobs report all important August 1. "borrowers floating in this period of time need to stay vigilant and aware of what is happening in the markets while remaining in close contact with their loan officer."-Hugh w. Page, Senator, mortgage Consultant mortgage Capital Partners

"If you float on this point, I would certainly wait to see what brings the Monday and then carefully adjust my plan each day go ahead." Mortgages are still far lags behind the Treasury bills and next week there is much data that can strongly influence both. Floating with caution in the next week is my plan. "-Brent Borcherding, www.brentborcherding.com

"The dust settles, if for the moment, after frenzied action of yesterday. More great concern after that rate improve because of geopolitical unrest, is that gains can evaporate quickly. In this spirit, people within 30 days of closing can take a critical look at today's prices. Those who have longer deadlines and a risk tolerance, could consider floating. The Ukraine is not resolved, Israel is still in the Gaza Strip, etc., so the potential for incidents more is high. Look forward to seeing dramatic international, but it often helps mortgage rates. » Ted Rood, main Planner mortgage, tedroodteam.com

"I am in favour because I believe that they are not likely to remain around locking in the small recent gains. Geopolitical events are reflected in the current market, keeping rates low, but these effects can quickly fade. ' -Michael Owens, VP of mortgages at Guaranteed Rate, Inc..

Best performance of today rate

30 year fixed - 4.125
FHA / VA - 3.75%
15 YEARS FIXED - 3.375%
5 year arm - 3.0 - 3, 50% depending on the lender

Considerations of course/float lock

The hallmark of 2014 so far has been a disconcerting range restricted in the tariffs.  Too many market players bet on rates increasing them in 2014, and markets have sanctioned this imbalance with a less paradoxical movement. From June, the rates were officially lower-year, but it is because of the trajectory of the rates higher in 2013.  The current path in 2014 remains on the side.  European markets continue to play a role in the background, haunting generally helping rates in the United States remain lower than otherwise, they could be.  From a broader point of view, we are in limbo, wait the first important move away from close range.  A rally in late May was a chance to act as this break, but rates have since returned to what were previously the lower limits of the range of 2014. As always, please keep in mind that rates discussed generally relates to what we have called 'best performance' (otherwise said, the most frequently cited, compliant, 30 year fixed rates for borrowers from high level, only on the price of pure and simple non-based, but also 'bang-for-the-buck.'  In General, our best execution rate tends to connote no departure or discount points - even if this may vary - and tends to predict the weekly Freddie Mac survey with great precision.  It is reasonable to assume that our rate of best-ex is the fastest and most accurate of the two due to the method of voting once per week from Freddie).  Coo, Mortgage News Daily / MBS living a former writer, Matthew began writing for Mortgage News Daily in 2007, covering a wide range of topics. Seeing a need in the marketplace, its focus shifted increasingly towards relating MBS and the broader financial markets for loan originators. ... more

MBS RECAP: Market Monotony Broken By Geopolitical Events; Big Rally For Bonds

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Today offered a triple or possibly quadruple-whammy for bond markets, almost exclusively in the form of overseas events.  The weakest among these was the notion that yesterday's announcement of new sanctions against Russia was a profound market mover.  While that's technically possible, it wasn't plainly evident in overnight trading.

By the start of the domestic session, bond markets were only in slightly stronger territory.  The next boost was the only domestic consideration today.  June Housing Starts came in much weaker than expected and broke below a trend of growth that had been intact since the beginning of 2011.  Bond markets improved on the data, despite a stronger-than-expected Jobless Claims report. 

Trading proceeded in relatively uneventful fashion until the day's first geopolitical catastrophe unfolded when news hit of a Malaysian airliner being shot down on the Russia/Ukraine border.  this set the tone for the rest of the day as bond markets rallied steadily and stocks moved lower. 

This brought 10yr yields right to the important 2.47% level before the last major geopolitical headline came out.  Just after 3pm, Al-Jazeera reported that Israel launched a major ground/air/sea assault on Gaza.  Market reaction was sporadic, peaking in intensity at 3:15pm, but never really doing anything but carry yields and stocks lower.  Israel confirmed the news at 3:40pm.

As is always the case when it comes to global flights to safe-haven assets, Treasuries outperformed MBS handily.  Even so, MBS weren't completely tuned out from the rally, managing to gain 3/8ths of a point by the end of the day.  This brings Fannie 3.5s to 102-15.

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live. Pricing as of 7/17/14 5:04PMEST Today's Reprice Alerts and Updates 4:09PM  :  Israel Ground Offensive in Gaza Sends Bond Yields Lower Still 2:17PM  :  Ongoing Positive Reprice Potential as Treasuries/MBS Hold Gains 10:08AM  :  Strong Philly Fed Data Reinforces Bounce Toward Weaker Levels 9:37AM  :  Bond Markets Stronger Overnight, and Another Boost From Weak Housing Data Matthew Graham  :  "yeah, it's still pretty sudden. And just because MBS are better positioned to soak up weakness doesn't mean a run to 2.66 in Treasuries wouldn't hurt" Hugh W. Page  :  "Still don't trust this rally just yet. Need some follow through IMO. I think for short timers it's a lock opportunity." Roland Wilcox  :  "MG so timely just shared analogy w/client who inquired about 10yr/MBS relationship" Sung Kim  :  "thank you MG, that really helped" Matthew Graham  :  "conversely, if broader markets lose ground, MBS will have already been lagging behind, and thus potentially not lose ground at the same pace." Matthew Graham  :  "That's what I meant by "slingshot" if broader markets improve." Matthew Graham  :  "when MBS are underperforming, they're like the dog pulling back reluctantly on the leash. Right now it's pretty stretched. If the master continues to walk forward, it could make for a relatively rapid move forward by the dog." Matthew Graham  :  "In this analogy, the "leash" is stretchy " Matthew Graham  :  "Let's begin by recalling an analogy we sometimes use of the 'Master and the Dog.' The overall momentum in bond markets is like the Master. The best benchmark we have for that is 10yr yields, which is why we talk about them so much. MBS are like the dog (and no, there's no deeper meaning here). The master sets the course for where the two will walk but the dog can tug at the leash--either reluctantly or eagerly. " Sung Kim  :  "MG, would you mind expounding on that comment?" Hugh W. Page  :  "That insight is invaluable info" Matthew Graham  :  "The fact that Treasuries are here with MBS having underperformed so consistently for the past 1.5 weeks may set us up for a bit of a slingshot if broader market stays strong, or to better endure weakness if broader markets bounce." Andy Pada, Jr.  :  "the real time chart is such an amazing tool" Andy Pada, Jr.  :  "as horrible the circumstances may be, I was able to lock in a bunch on live pricing at noon. " Discuss the MBS and Mortgage Markets on Our Streaming Dashboard

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Rental Market Stabilizing but Renter Profile is Changing

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While the magnitude isn't clear, that the growth of renter households has risen far above average in recent years is. The Housing Vacancy Survey reports that the number of these households increased by half a million in 2013 while the Current Population Survey reports nearly double that number.  In the fifth part of its report on The State of the Nation's Housing, the Harvard Joint Center on Housing Studies said either number exceeds the 400,000 annual increase of the last few decades.  The report also notes that this increase appeared to slow at the end of 2013 along with the drop in homeownership rates.

Along with growth, there has been a shift in the renter population.  The usual groups, young adults, low-income households, and singles have been joined by high-income earners, families with children, and older persons. While those under age 35 account for a quarter of renter growth, renters 55-64 ballooned almost as much.

The recession expanded the ranks of lower income households and these in turn accounted for the largest share of renter growth. Those earning under $15,000 per year accounted for a quarter of the growth and those with incomes of $15-29,999 for 30 percent.  Families with children have had the sharpest drop in homeownership and the greatest spike in renting while the highest income earners contributed to 23 percent of the growth.

The continued growth in demand for rentals was not immediately met by supply and the rental vacancy rate tightened to 8.3 percent in 2013, the lowest since 2000.  However it represented the smallest shrinkage in the rate since 2010.  The vacancy rate for professionally managed apartments has not changed in over two years.

Rent increases have been relatively constant, about 2.8 percent in both 2012 and 2013 while rent hikes in professionally managed buildings have slowed from 3.7 percent to 3.0 percent. Both rates outpace the 1.5 percent growth in inflation.  The same patterns holds through most metropolitan areas.

The supply is now catching up with rental demand.  Construction starts for multifamily buildings have moved from a low of 109,000 units in 2009 to 300,000 in 2013, 13 percent fewer than at the 2005 peak and 90 percent of those units are intended as rentals.  But these gains may be short-lived; permits increased in 2013 at half the rate of 2012.  Still completions should continue to grow from the 195,000 units in 2013 as much construction may still be in the pipeline.

Even at the recently increased pace, multifamily production is below the average for the last decade in many markets.  Permits exceed the 2000s averages in 47 of the largest 100 metro areas but were less than half those levels in 23.

Investment grade properties appear to be close to supply/demand balance; the growth in each was about 160,000 units in 2013.  Rent gains in these units has been more modest and even if demand remains constant the expected growth in completions should create some slack.  

The growth in new multifamily construction, 1.6 million units from 2006 to 2012, met just a fraction of the growing rental demand from 5.2 million households.  The conversion of owner-occupied single family homes to rentals provided most of the new supply.  An estimated 3.2 units converted to rentals during this period, pushing the single-family composition of the market from 30 percent in 2006 to 34 percent six years later.

Single-family rentals have traditionally been owned by individual investors but the high volume of distressed homes for sale, weak demand from owner occupants, and high rent-to-price ratios enticed institutional investors to buy following the recession.   An estimated 200,000 single family units were bought by these investors between 2012 and early 2014.

These investments were concentrated in select markets and now with the distressed market shrinking there is evidence these investors are pulling back.  However the experience they gained in managing and financing large portfolios of single family housing may provide new business models for investors to follow; several have issued securities backed by cash flow from these rentals.  There are also implications for communities with large concentrations of these investments should their owners opt out of ownership.

New construction typically tends toward higher priced units; the median rent for new units in 2010 was $1,052, affordable by traditional measures to those earning over $42,200.  Only a third of units built in 2010 rented for less than $800, "affordable" for a household earning $28,000. Building affordable housing is difficult because of the high cost of appropriately zoned land and financing for acquisition and development on top of actual construction costs.

Meanwhile at the low end owners may lack revenue for operating and maintenance, putting these properties at risk for removal.  Some 1.9 million of the 34.8 million rentals that existed in 2011 (5.6 percent) had been demolished 10 years later and the loss rate for units renting under $400 was twice that high, accounting for a third of all removals.  Removal rates decline as rents increase to 3.0 percent of units with rents over $800.

Losses are particularly high in rural areas, 8.1 percent compared with 5.7 percent in central cities and 4.7 percent in suburbs, reflecting the greater presence of mobile homes.  These homes account for 10 percent of the housing stock in the South and West and more than one in five was removed between 2001 and 2011.

The Center said that low vacancies and rent increases that consistently outrun inflation means apartment properties continue to perform well.  Net operating income of commercial grade properties were up 3.1 percent in 2013, below the 6-11 percent growth in 2011-12 but still nearly matching the three decade average. 

Apartment values are appreciating at what the Center calls a remarkable pace, up 14 percent on average in 2012-13 to a new high; beating the 2007 peak by 6 percent, far outstripping owner-occupied market recovery. Cash flow and appreciation led to a 10.4 percent annual rate of return on commercial grade properties in 2013, nearly matching the 11.5 average of 1995-2004 and suggesting more sustainable growth.

Multifamily loan delinquencies are trending down with serious (90+ days) delinquencies slipping below 1.0 percent in 2013 for the first time in five years.  Delinquencies in Fannie Mae and Freddie Mac backed Commercial Mortgage-backed Securities (CMBS), while still high by historical standards, also dropped under 1.0 percent.

Private multifamily lending has rebounded.  According to a Mortgage Bankers Association survey, these originations were up 36 percent in 2012 and 13 percent last year.  Of note is that lending by banks and thrifts which was flat in 2010 had jumped 29 billion by 2013 while government backed loan, the dominant factor in multifamily lending early in the recovery, increased by only half that amount. 

The Center projects that, as long as they perform well, multifamily properties should attract increasing levels of private funding.  In the meantime, plans to shrink federal involvement have been put on hold because of rising demand and to address affordability challenges.

The Center points to the difficulty in predicting homeownership rates and thence rentership rates because of their dependence on several economic and attitudinal factors.  But assuming that homeownership is stabilizing and that new rental units continue to come on line, the Center estimates that demographic forces alone will left the number of renter households by 4.0 to 4.7 million over the ten years ending in 2023, exceeding long-ran averages over the past several decades.  

Two broad trends will drive this; the imminent surge in older households; renters over age 65 are projected to rise by about 2.2 million or about half of market growth, and the increasing racial/ethnic diversity of younger age groups.  The aging population also means that the share of renters who are single or married without children will soar.  Meeting this diverse demand will require a range of new rental options and a variety of community settings.

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Six Points to Consider Before Hiring a Market Research Firm

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Zillow's Top Economist Nails It On The State Of The Housing Market

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This morning we got home-price data that showed slowing momentum.

Prices were up over 10% from last year, but those gains are down a bit from recent peaks. And, in general, the housing numbers have been mixed. Starts and sales, though up significantly from recent years, remain quite low by historical standards, and don't appear to be on the verge of surging higher.

In an email, Stan Humphries, the top economist at real-estate site Zillow, had the best characterization of the market that we've seen. Read this whole thing, especially the part that we've highlighted:

“There’s no doubt that these can be confusing times for ordinary people trying to read the tea leaves. Home sales are up for the month, but down for the year. Case-Shiller is way up for the year, as always, but slowing. Inventory is coming back, but not at the low end of the market. Negative equity is falling, but is still extraordinarily high in many areas ... The reality is that the market is moving from one defined by distortions including high negative equity and constricted inventory, to one defined by fundamentals like household formation rates, jobs and income growth. Unfortunately, some of these fundamentals are still fairly weak. This is a multi-year process that we are far from done with. This ride is not for the faint of heart, but we are slowly getting back to normal.”

Humphries is absolutely right about all of the distortions that have characterized the market in recent years. First there was the crash, obviously. Then the snapback. Then all the sales of distressed homes and huge investors scooping up homes in droves. All of these things are fading, and now we have something increasingly resembling a normal housing market.

Is the UK housing market broken?

House prices have risen sharply in the past year; good for homeowners, bad for those looking to buy Bank of England governor Mark Carney has proposed a cap on the proportion of home loans that can be lent at high multiples of income.

Under the proposal, lenders will not be allowed to lend any more than 15% of residential mortgages at more than 4.5 times a borrower's income. Affordability checks on borrowers will also be strengthened.

The measures seek to address what some commentators view as a dangerous housing market bubble.

According to the latest figures from the Office for National Statistics, UK house prices rose by almost 10% in the year to April, while those in London rose almost 19%.

Some argue these kinds of rises are simply unsustainable and make home ownership unaffordable for too many working people.

But just how deep-rooted is the problem?

The BBC has asked a number of experts what they think.

Continue reading the main story

London's status means the whole city acts as a massive 'centre', not only at metropolitan level but nationally and even globally”

End Quote Kath Scanlon, Research Fellow, London School of Economics The UK market isn't broken, but London's is.

Or to be more accurate, London's housing system is broken - because the market is working as markets do. One of the fundamentals of urban economics is the relationship between the cost of land (or housing) and its location - housing space close to the centre of an urban area costs more than space at the periphery.

London's status means the whole city acts as a massive 'centre', not only at metropolitan level but nationally and even globally. This dynamic, plus the fact that housing supply in London is basically static, means that prices have risen far more in London than elsewhere in the UK.

But we want a city with social mix at neighbourhood level, affordable housing for key workers and stable accommodation for families, which the market won't necessarily produce.

How to achieve these? Unfortunately there's no single answer, but incremental and piecemeal changes can have an effect over time. Here are three ideas:

Continue reading the main story A social-science researcher who writes on a range of subjects related to housing, planning and the role of governmentShe has looked at housing markets and policy in Germany, Denmark, Spain and the US as well as in the UK, and has advised government departments, international organisations and development banksReinstitute a property tax based on house values and do away with stamp duty. This would create an incentive for 'over-occupiers' to downsize and remove the financial penalty that currently deters transactions. Limit the size of mortgage loans by capping loan-to-value or loan-to-income ratios, which would reduce effective demand. Give the Mayor greater control over planning permissions for new housing, as local opposition to new development can be hard for borough politicians to counter. Continue reading the main story

Solving the housing shortage is possible, but sticking plaster solutions like Help to Buy or tweaks to planning rules just won't cut it”

End Quote Campbell Robb, chief executive, Shelter Our housing market is broken. Successive governments have failed to build the number of homes we need and now we're reaching boiling point.

Every day, we hear from those bearing the brunt of our housing shortage - from hard-working young people watching their dream of owning a home slip away, to families left with little choice but to bring up children in overcrowded or poor conditions.

Year after year we've built at least 100,000 fewer homes than we need, and the result is not just a lack of affordable homes, but a full-blown drought.

Research by Shelter and KPMG has shown that, if current trends continue, half of all adults under the age of 35 will be stuck living in their parents' home within a generation.

And a report we launched this week shows that a staggering 80% of homes on the market in England are unaffordable for the average working family looking to buy their first home.

Continue reading the main story Started as chief executive of Shelter in January 2010Before that he was the first Director General of the Office of the Third Sector in the Cabinet OfficeSolving the housing shortage is possible, but sticking plaster solutions like Help to Buy or tweaks to planning rules just won't cut it, and risk making the problem even worse.

We need to be boosting small builders with government guarantees and getting land into the hands of those who can build the homes we need.

We need New Home Zones to free up the right land at the right price, to help build a new generation of homes for sale and social or part-rent, part-buy homes that those of us on low and middle incomes can afford.

Without real solutions like these, homelessness, house prices and our benefit bill will continue to rise out of control. Bringing a stable home back within reach for this generation and the next is possible, but only if politicians roll up their sleeves and commit to the solutions that will finally fill the gap between the homes we have and the homes we need.

Andrew Regan, partner, Regan and Hallworth estate agents The property market is not broken in Wigan, it is working just fine, as I suspect it is in most parts of the UK.

For the market to boom again there needs to be an imbalance between supply and demand. There is no imbalance.

First-time buyers are being helped with the government-backed Help to Buy scheme, mortgage lenders are offering 95% mortgages to certain buyers with good credit scores, mortgage surveyors are being realistic with their valuations, house builders are building and there is no shortage of supply - there are currently around 2,000 local properties on the market, and the local council has allowed plenty of planning for new housing developments.

The property stock in our area represents good value for money in relation to people's earnings.

Continue reading the main story Twenty-five years experience in the housing market, having started his estate agency career in 1989 with the Abbey NationalOpened his own estate agency 1996Sells around 800 properties a year in the Wigan areaIn my opinion, the property market is driven by the mortgage lenders, and they have a duty to act responsibly and lend with sensible income multiples, then house prices will only rise in line with inflation. I really do think it is that simple.

This is not London - we do not have thousands of multinational buyers seeking to invest in our property market.

The media is obsessed with the so-called "property bubble" and is disproportionately reporting the market. This makes our life more difficult when pricing clients' property to sell, because we have to report how the market is performing locally in reality, not how it's reported by the media.

Yes there is pent up demand because the market has suffered a terrible crash and is recovering, however there is no "bubble" in Wigan to burst.

Continue reading the main story

The problem of housing affordability is rooted in the failure for more than three decades to ensure that we build enough homes”

End Quote Bernard Clarke, Council of Mortgage Lenders It really depends on which part of the housing market you are talking about.

For some time, we have pointed to differences in market conditions in different parts of the UK. In London, the headlines are about a booming market. But that description is unrecognisable to people living in much of the rest of the UK. We do not have a national housing market, so much as a fragmented one.

Continue reading the main story Has been a spokesman for the Council of Mortgage Lenders (CML) for 15 yearsHe has written widely about housing and mortgage markets, and edits a fortnightly newsletter about housing financeYou could argue that the market is working - but reflects a long-standing divergence between demand and supply. Overall, the problem of housing affordability is rooted in the failure for more than three decades to build enough homes to keep up with demand.

But the problems are felt most acutely in London, where population growth, cash buyers and an influx of wealthy foreign purchasers have fuelled demand, while supply has been particularly unresponsive.

In the aftermath of the credit crunch, the mortgage market is now functioning more effectively - the availability of funding has improved, and there is greater competition, choice and access for mortgage customers.

Finally, we have to consider housing in different tenures.

Buy-to-let has contributed to a rapid expansion of the private rented market, which is generally functioning well. Owner-occupation has declined against people's wishes, partly because of a shortage of supply. But the social housing sector has seen the biggest decline of all over the past three decades or so.