Why are prices going up?

From National Mortgage News:

Home Prices and Homeownership Rates Are Out of Whack

Before the financial crisis, home prices and homeownership rates moved roughly in tandem. Expanded access to credit and a booming real estate market made homeownership easier for more Americans. When existing median home prices reached their precrisis peak is roughly when homeownership rates for both those under the age of 35 and for those ages 35 and older began to slip.

And they haven’t recovered since. Today, the homeownership rate for both groups is lower than it was more than 20 year ago. But the picture now is looking bleaker than it did before and even during the crisis. Home prices have returned to their precrisis peaks, but homeownership rates, which were already depressed because of the crisis, keep on slipping. Affordable housing is becoming scarcer across the country, but especially in popular markets such as the Pacific Northwest and California. And homebuilders have stopped building starter homes at the same rates they did before the crisis, instead turning to the more lucrative luxury home end of the business. Single-family starts are running at recession levels, and home sales are short of normal, according to economists.

“We do know that homeownership rates for young people are lower,” Danielle Hale, managing director of housing research at the National Association of Realtors, said. “They’re now lower than in the mid-1990s.”

But signs are cropping up that the tides may be finally shifting to get the home sales market back to where it once was. Citing mortgage application data, the Mortgage Bankers Association has noted that there’s greater demand year over year for loans under $150,000. Those loans are closely associated with first-time homebuyers, indicating that they are starting to return to the housing market.

But chances are that once they do return, they’ll be older thanks to the waiting game caused by the financial crisis. For the past two decades roughly, the median age of first-time homebuyers has hovered within a range from 30 to 32 years old. Looking ahead, first-time buyers may enter homeownership later in life.

This entry was posted in Demographics, Economics, National Real Estate. Bookmark the permalink.

45 Responses to Why are prices going up?

  1. grim says:

    Looking at the embedded chart in that article, it really doesn’t appear that there is a relationship (correlation) at all.

    There are a couple of other issues. Data series would need to be real prices, not nominal prices, to eliminate the impact of inflation – which doesn’t appear to be the case in the graph.

    In addition, it completely ignores the impact of the population increase. Overall demand for housing can increase, even though the homeownership rate, on a percentage basis falls, if the population growth is in excess.

  2. grim says:

    From Philly Voice:

    Camden-area real estate market still struggling to recover

    The metro real estate market centered around Camden County lags the nation in terms of recovery from its peak value before the housing bubble began to burst a decade ago.

    In fact, the Camden metro statistical area division, which includes Camden, Burlington and Gloucester counties, is one of the bottom 10 locations in the country and the least recovered location in the Mid-Atlantic.

    It holds down the spot eighth from the bottom and is still 26.7 percent below values at the height of the peak, according to a study by Keith Gumbinger, a vice president at hsh.com, a company specializing in mortgage research.

    A home in an exclusive Cherry Hill neighborhood vividly illustrates how the Camden metro area has still not bounced back.

    The property at 47 Manning Lane sold for $2.9 million in 2008, just before the Wall Street financial crisis triggered the Great Recession. It went up for sale in 2011 and languished on and off the market for five years. When a sale finally closed last month, it fetched just $1.2 million.

    While the upper-end home – more than half an acre, 6,600 square feet, five bedrooms, six full baths and two half baths – may not be the typical home in the county, its depressed value speaks volumes, according to Anne E. Koons, a Realtor in Cherry Hill.

    “The story for home price recovery in either area is a familiar one: Areas that didn’t ‘bust’ the most have had greater levels of improvement,” he said. “The Camden area’s decline from its peak was 26.08 percent, while the Philly market was just about half as much at 13.63 percent. This speaks to the maintenance of the employment base during the downturn and more.

    “Philly’s recovery also started sooner,” he noted. “The market hit price bottom in 2011 Q4 while Camden didn’t finish falling until three quarters later [2012 Q3] – so Philly had a little more of a head start on recovery.”

    Gumbinger said the slow and cumbersome foreclosure process in New Jersey and an over-reliance on sub-prime loans during the boom years may “be depressing price recovery to a greater degree in one state versus the other.”

    “How far off is full recovery? For markets trying to climb out of the deepest holes, it will be more of a grind than not. It will probably be years yet as gains will probably be incremental at best,” said Gumbinger.

    “I don’t know if that boom market will ever come back,” Koons said. “There are no new businesses adding jobs and real estate taxes are so high.”

  3. walking bye says:

    Your last sentence #2 tells it all.

    Also from your first post, income would seem to be the greatest driver for home ownership/price appreciation. From census stats

    US Real Median Family Income Trends since 2005

    The current median family income for the United States is $65,910 (2014). Real median family income peaked in 2007 at $69,849 and is now $3,939 (5.64%) lower. From a post peak low of $64,473 in 2012, real median family income for the United States has now grown by $1,437 (2.23%).

  4. Ottoman says:

    So the hyper gentrification of major urban centers pushing rents up, and in turn sales prices, during the last ten years-which is a national trend-had nothing to do with Philly’s faster and higher recovery over the south jersey suburbs? It’s mostly the difference in foreclosure process? Or the employment base since Philly jobs are so far from NJ? It’s probably easier to get to center city from NJ than most towns in the philly metro statistical area.

    Anyone been to Pittsburgh lately? It looks like effing Williamsburg.

    Seems to me it would be better to compare Camden county to Delaware County and leave philly out of it.

    Also wonder how lopsided the numbers are depending on town. are haddonfield and moorestown lagging philly too or is Camden bringing down the curve. Same with Cherry Hill. just because someone was stupid enough to drop 3 mill on a house in the functional and esthetic equivalent of Springfield in Union County, but without the similar proximity to Manhattan, doesn’t prove the whole town is in crisis.

    “While the upper-end home – more than half an acre, 6,600 square feet, five bedrooms, six full baths and two half baths – may not be the typical home in the county, its depressed value speaks volumes, according to Anne E. Koons, a Realtor in Cherry Hill.”

  5. grim says:

    Agree, to some extent it’s not even “gentrification” that is pushing up these starting area rents, it’s simply general improvement/demand in the area. Not talking about the kind of Whole Foods driven gentrification we all think about, but just a lift from what were typical poverty-levels to something closer to a middle income (yes yes, technically the same).

    There is a lot of this going on, and nobody really talks about it because it isn’t sexy, but it’s real. It seems like to the media, unless the trend includes an artisan toilet paperie, it’s not happening, but that’s not the case. The real rent revolution here has been quiet. I’m not even talking about typical gentrification triggers, like the kind of brooklynesque artstification. I’m talking about a much more boring/pedestrian trend.

  6. Steamturd still chopping says:

    Never trust a realtor named Anne E. Koons?

  7. grim says:

    The problem with Camden is that it’s stigmatized, and Philly, really, has never been a major upscale urban center. We aren’t going to see the kind of out-flow that gentrified Hoboken and Jersey City until Philly becomes so expensive that it drives significant portions of middle income buyers out in search of affordability.

    Philly has some expensive areas, but there are lots of less-expensive areas. Will Philly’s gentrification push people into the further reaches of Philly, or over the river into Camden?

    Honestly, I would imagine you would see a greater portion of organic growth in Philly’s fringe neighborhoods before you see material spill-over into Camden proper.

    Which means a Philly-driven gentrification of Camden is probably decades away, if ever.

    A smarter strategy would be to bulldoze much of Camden and push to relocate much of Philly’s heavier industry into Camden.

  8. grim says:

    Besides, what kid in the midwest is saying, right now, I need to get the hell out of this place and get my ass to Philly?

    Look, I love Philly, I go there for weekends and stay over, at least once or twice a year.

    The same star-power, aspirational cities have kid’s eyes glimering: NY, NYC, San Fran. We have a new breed of hip alternatives: Portland, Austin, Seattle, Denver, etc.

    In this respect, Philly is closer to Pitt, Milwaukee, etc etc. I just don’t see it. What’s Philly got to inspire and attract the younger generations? (Other than, “At least it’s not Camden.”)

  9. Anon E. Moose, Second Coming of JJ says:

    Grim [7];

    Philly, really, has never been a major upscale urban center.

    It was in the late 18th century. Since then, however…

  10. Steamturd still chopping says:

    I wonder if there are Anne E. Koons in Camden?

  11. grim says:

    The only bulldozers in Camden are tearing down places, not building new ones.

    We need a bulldozer index, pretty sure it would show a tight correlation with Camden pricing.

  12. LOL. Bloomberg Radio, in the tank for Hillary(shocker), now saying that we “make too much of the polls” on news that the CNN poll puts Clinton behind Trump.

  13. You’ll notice a couple interesting things:

    1. When Sick Hillary can no longer continue, she retreats to the care of her neurologist.
    2. Her photog, Diane Kinney tries to block the filming by the press by standing in the aisle taking her own photos (of the press corp?).
    3. You’ll hear an announcement right after Hillary can’t continue o the PA that all devices must be turned off and Wi-Fi is no longer available.

    https://www.youtube.com/watch?v=UhZJBHrX-T8

  14. Steamturd still chopping says:

    Hillary – perennial loser

  15. Barbara Kinney, not Diane Kinney.

  16. Alt-right (the good one) says:

    @nytimes

    Breaking News:

    Gretchen Carlson won $20 million in her sexual harassment case against
    Fox News and Roger Ailes

  17. Hillary’s speech rider:

    https://www.youtube.com/watch?v=DP_Aom0MRCg

    The reporters had some question on the phone charges. What they apparently don’t know is that both Bill and Hillary like making international calls from hotel rooms. At a California speaking event it was reported that they stuck the company paying for the speech with a $1400 hotel phone bill.

  18. Essex says:

    My thought is that great colleges (Penn, Carnegie-Mellon) help to bring interesting people to these secondary Cities and probably make converts out of them and either keep them after graduation or not in some cases.

  19. And he didn’t even get a handy. Sad.

    Gretchen Carlson won $20 million in her sexual harassment case against
    Fox News and Roger Ailes

  20. nwnj3 says:

    Yes, it’s poor but I don’t think many people care about her health. She’s basically a lobbyist consortium embodied so the platform will carry on without her.

    Her neocon, billionaire backers and disastrous immigration policies are much more harmful to her campaign. Add to that a lot of disenfranchised who aren’t going to show up and things get more interesting.

  21. Alt-right (the good one) says:

    @NPR
    Carlson had alleged that her refusal of sexual advances by Ailes
    led to recrimination that included a pay cut.

    “And in another development at Fox News, longtime anchor Greta Van Susteren is leaving the network, in a move that takes immediate effect: She will not host tonight’s edition of her 7 p.m. show.”

  22. nwnj3 says:

    Figures that the idiot would gravitate to the tabloid story instead of actual news. Sad, but typical of the growing segment of the electorate.

  23. Alt-right (the good one) says:

    @GeraldoRivera

    Stunning news about @greta our treasured colleague & one of nicest people in news business.

    Don’t know what’s up & hope she & John fare well

  24. Alt-right (the good one) says:

    @kyleblaine

    Source close to @greta tells @gabrielsherman she left Fox News because

    “she is troubled by the culture”

  25. STEAMturd knows hyper incarceration makes hyper gentrification oh so much easier says:

    How about my call on Hermine?

  26. You da man, STEAM.

    How about my call on Hermine?

  27. grim says:

    Forecasters held on to that disaster forecast for way too long.

  28. STEAMturd knows hyper incarceration makes hyper gentrification oh so much easier says:

    Remember. The first big storm of every season is always overhyped. Albeit snow or hurricane.

  29. Comrade Nom Deplume, Annoying Leftists for Over a Quarter of a Century says:

    Otto sorta makes sense and Pumpkin is nowhere to be seen.

    I’d say I was in the Twilight Zone except that the Twitiot is up to his usual inanity.

  30. D-FENS says:

    As long as it doesn’t rain Thursday…that’s all I need to know.

  31. I’ll tolerate the former to continue the latter. If I still used a mechanical scroll wheel I would have gone through three mice this year flying by the Pump posts.

    Otto sorta makes sense and Pumpkin is nowhere to be seen.

  32. LOL! Cosby says he’s now blind. He may need special assistance during his trial. It must really crimp your lifestyle to not be able to tell tell the rufies from the vi@gra.

    http://pagesix.com/2016/07/18/bill-cosby-is-completely-blind-and-trapped-in-his-home/

  33. No One says:

    #2,
    46 Manning Dr in Cherry Hill pays over $50k of property taxes per year. The journalist that wrote an article about depressed property prices, mentioning bedrooms and acres without noting the huge annual shakedown the town demands from the owner, should be ridiculed for missing an obvious depressor of home value. The “homeowner” must pay over $4k/ month in rent to the town before even starting to pay for the cost of the actual house itself.

  34. Comrade Nom Deplume, Annoying Leftists for Over a Quarter of a Century says:

    I’ve decided that the phrase “politically correct” has to be changed. It is itself a “politically correct” term that cedes ground to the leftists that use it.

    I will no longer use the term or the ubiquitous “PC”.

    I think I will use the term “antiparty” for things that are “un-PC”.

    And I will always address a leftist as Comrade

  35. Clotpoll says:

    Doom is nigh.

  36. Clotpoll says:

    Woozy, post-surgery (nothing major), laying on my back watching fox sports & almost the whole show’s dedicated to MMA.

    Is this what it’s come to? This isn’t sport.

  37. Clotpoll says:

    Are we in a blumpty-free patch here?

    Refreshing.

  38. Clotpoll – Blumpty is dead. Long live Blumpty. (I never understood that)

  39. Steamturd still chopping says:

    Someone needs to write the ballod of Peter Plumpkinhead.

  40. D-FENS says:

    You can argue that Hillary isn’t sick…but she sure is gross. This will haunt my dreams…

    https://twitter.com/kek_magician/status/773196893383909376

  41. grim says:

    That’s an illusion, refraction through the water.

  42. Ben says:

    Someone needs to write the ballod of Peter Plumpkinhead.

    Let’s begin

    Peter Plumpkinhead came to town
    Spreading wisdom and cash around
    Needed a home to rent to four
    Isn’t that what Grandma’s for?

    But he made too many enemies
    The stocks he pushed only cost pennies
    Hooray for Peter Plumpkin
    Who’ll pray for Peter Plumpkinhead?

    Peter Pumpkinhead fooled them all
    Spammed the site until this past fall
    When he spoke, it would cave the roof
    Plumpkinhead thought he told the truth

    But he made too many enemies
    The stocks he pushed only cost pennies
    Hooray for Peter Plumpkin
    Who’ll pray for Peter Plumpkinhead?

    Peter Plumpkinhead put to shame
    Posters who would slur his name
    Plots and spam filters failed outright
    Peter merely said
    Any kind of inflation is alright

    But he made too many enemies
    The stocks he pushed only cost pennies
    Hooray for Peter Plumpkin
    Who’ll pray for Peter Plumpkinhead?

    Peter Plumpkinhead was too good
    For the snooty town of Ridgewood
    He was banned from posting while at work
    His boss must be some kind of jerk

    But he made too many enemies
    The stocks he pushed only cost pennies
    Hooray for Peter Plumpkin
    Who’ll pray for Peter Plumpkinhead?

    Hooray for Peter Plumpkin
    Who’ll pray for Peter Plumpkin
    Hooray for Peter Plumpkinhead

  43. Steamturd still chopping says:

    Very nice Ben!

Comments are closed.