Anglais, Commerce International

Rising from the ruins

The housing market is low/ far from healthy. Home prices are over 30 % below peak. Mortgage borrowers own more than the value of their homes. About 10m are delinquent on their loans or in foreclosure. Ghost neighbourhoods filled with dilapidated properties.

America has only a minor problem of excess housing supply which, under normal conditions, would have quickly disappeared. Now, America is adding new households at a rate well below normal because young people are staying longer in their parents’ home. (about 1,5m more young adults between 18 and 34 living at home) The population isn’t growing more slowly. The principal cause is probably the fact that they have to save their money because of a sickly economy. Better prospects for young adults would encourage the forming of new households.

Rental markets look stronger (9,8 % in the third quarter of 2011). Vacancy rates are really low in some cities (2,4 % in New York City, 3,6 % in San Francisco) which translates into rising rents. Rents rose 2,1 % in the year to August which is a strong contrast with house prices.

The Obama administration hopes to take advantage of better rental conditions to unload more than 200 000 foreclosed-on homes held by the two government sponsored mortgage giants (Fannie Mae and Fredit mac & The Federal Housing Administration)

The macroeconomic environment remains troublesome.  Housing markets could still go down if a new shock, maybe from Europe, disturbed the global economy.

More bust than boom

Graphic about new privately owned housing units in millions. Very high in  around 1970 and in 2004 (more than 2m). Low period around 1982 at about 1m of new privately owned housing units.

New records in 2010 with about 0,7m of new privately owned housing units. Lowest record ever.

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