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The State of the Nation's Housing 2007 |
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Harvard University Joint Center for Housing Studies: The U.S. housing market continues to struggle under a cloud of sharp drops in housing demand and an oversupply of stock according to this year's State of the Nation's Housing report from the Harvard University Joint Center for Housing Studies. After years of setting records, housing starts and sales fell in 2006 and are on track to end this year even lower. Homebuyers on the margin of qualifying for mortgage loans finally pulled out of the market despite the availability of creative mortgage products that helped them keep up with higher house prices. Though builders cut back on housing starts, the numbers of vacant homes for sale rose by more than 500,000 from the fourth quarter of 2005 to the fourth quarter of 2006 and continued to rise in the first quarter of 2007. Meanwhile, the tightening of credit standards in the wake of worse than anticipated subprime loan performance is further dampening demand. It is unclear how the wave of subprime loans with steep initial discounts that originated at much lower interest rates will perform when the discounts expire and the loans reset to higher interest rates. "In just one year the number of households spending more than half their income on housing increased a startling 1.2 million to 17 million in 2005," notes Rachel Drew, Research Analyst. Largely, as a result of a record number of new immigrants arriving in the United States in the 1990s and larger numbers entering this decade, net household growth is poised to accelerate by about 2 million to 14.6 million households 2005-2015.
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