What U.S. Housing Market Recovery? Percentage of First-Time Home Buyers Falls Again
Housing-Market / US Housing May 29, 2013 - 10:59 AM GMT
Michael Lombardi writes: It’s almost as if the mainstream media is defining the U.S. housing market as being “hot,” while some economists are calling for robust growth ahead. But the reality is that we are far from a recovery in thehousing market and more troubles could follow.
As I have discussed in these pages many times before, institutional investors are running to buy homes for rental income, because the yields elsewhere are getting thinner. As a result, we’ve experienced hikes in home prices in the U.S. housing market.
Institutional investors rushed to buy homes with the philosophy of buy cheap, renovate, and rent. But they might be in for a surprise. According to real estate research firm Trulia Inc., since 2005, there have been almost four million single-family homes added to the rental market. That supply has met the demand created during the crisis in the housing market. (Source: Trulia Inc., April 4, 2013.)
As a result, the rental rates that institutional investors were banking on are actually compressing. Take a look at the table below, which depicts the year-over-year change in rental rates and home prices in some major cities in the U.S. economy.
And the fact of the matter is that we are missing the most important piece of the puzzle for a real housing market recovery—first-time home buyers. Existing-home sales reported by the National Association of Realtors (NAR) showed that in April, first-time home buyers accounted for only 29% of the purchases in the housing market—a decline of more than 17% from April of 2012, when first-time home buyers accounted for 35% of all the existing-home sales. (Source: National Association of Realtors, May 22, 2013.)
And there are other troubling issues in the housing market; more than a quarter of all homes with a mortgage in the U.S. housing market had negative equity in the first quarter of 2013, while 18.2% of homeowners didn’t have enough equity to be able to cover the related costs of selling or moving into another home. (Source: Zillow, May 23, 2013.)
All of this is just simply adding to my skepticism toward the housing market recovery. At the very best, the U.S. housing market is still very anemic.
Source -http://www.profitconfidential.com/real-...
Michael Lombardi, MBA for Profit Confidential
http://www.profitconfidential.com
We publish Profit Confidential daily for our Lombardi Financial customers because we believe many of those reporting today’s financial news simply don’t know what they are telling you! Reporters are trained to tell you the news—not what it can mean for you! What you read in the popular news services, be it the daily newspapers, on the internet or TV, is the news from a “reporter’s opinion.” And there’s the big difference.
With Profit Confidential you are receiving the news with the opinions, commentaries and interpretations of seasoned financial analysts and economists. We analyze the actions of the stock market, precious metals, interest rates, real estate and other investments so we can tell you what we believe today’s financial news will mean for you tomorrow!
© 2013 Copyright Profit Confidential - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.
