The Housing Market, Still Haunted
Six years after the Great Recession, key parts of the housing market continue to struggle to find momentum, the reasons for which are outlined in the new October edition of Business Conditions Monthly, the American Institute for Economic Research’s bird’s-eye view of the economy.
Owning a home has been held up as a key part of the American Dream, but the housing bust devastated Americans’ balance sheets and wreaked havoc on the financial system, the report notes.
As a result, home ownership rates have fallen to below 64 percent today, down from over 69 percent in 2005, according to the report.
“A weak economic recovery with slow job growth and anemic wage gains contributed to the decline, along with slowly declining unemployment and tougher lending standards. For younger Americans, the appeal of home ownership has weakened,” according to the report.
Home ownership rates have fallen substantially for Americans under 35 and over 65, according to the report, which includes interesting data and charts.
These shifts are likely among the main drivers of the relative weakness in new single-family home construction, according to the report.
“With many years of boomers turning 65 still ahead and potentially selling their homes, there’s a reasonable likelihood that the single-family home prices nationwide will be restrained for some time,” according to the report.
Business Conditions Monthly also includes its forecast for recession, which is especially noteworthy in this time of global economic instability.
Despite those issues, AIER’s economic outlook is still showing continued low risk of recession in the United States. For the most recent month, September, the proportion of AIER’s leading indicators deemed to be expanding was 67 percent, up from 64 percent in August, marking the fifth consecutive month with the index in the mid-60’s range, following three months at the neutral 50 percent level from February to April.