There were about 15 million vacant homes in the United States last year - an historic glut - according to John Burns Real Estate Consulting Inc., some 3.1 million more than normal, according to an article, entitled "Whey it's time to buy," in yesterday's edition of The Wall Street Journal by Ruth Simon and Jessica Silver-Greenberg.
According to Moody's Analytics, the ratio of home prices to income is now 20.9 percent lower than the 15-year average through 2010, and 12.5 percent lower than the 1989-2004 average, the article said.
"Moody's Analytics predicts that the number of distressed sales will begin to fall in 2013, and that prices will begin to edge upward then. Home building is at a virtual standstill, so the supply overhang isn't likely to get much worse. Meanwhile, demographic indicators such as 'household formation' - the number of new households each year - are on the rise and promise to take a bite out of the glut in coming years." the article continued, adding that "the long-term benefits of homeownership remain very much intact" and that "for now, at least, you can deduct the mortgage interest on your taxes - a big perk for people in higher tax brackets."
The article quoted Anthony Sanders, a real estate professor at George Mason University" that "while we might now see rapid growth in the next couple of years, there are a tremendous number of positive signs that could lead to a rebound."
"Once the foreclosure mess begins to clear up, say housing economists, the traditional driers of the housing market - demographics, affordability, loan availability, employment and psychology - should take over," the article maintained
The article noted that Moody's said that new households renting or owning a home picked up a big last year and combined with increased obsolescence and higher demand for second homes should beginning sopping up excess inventory in much of the country over the next two years.
"Rising home prices made renting cheaper than buying in many parts of the country But that dynamic has begun to change: housing affordability, as measured by the ratio of median home prices to median household incomes, has fallen below pre-housing bubble levels in just over two-thirds of the country, according to an analysis of more than 380 metro areas by Moody's Analytics. Renting is still cheaper than buyer in most markets, but rising rents and falling house prices mean that, in some areas this won't be the case for long. Buying a home is already cheaper than renting in Chicago, Cleveland, Detroit and Orlando, Fla., according to Moody's Analytics. In other markets, including Dallas, Las Vegas and Sacramento, Calif., the equation is likely to soon turn in favor of homeownership if current trends persist, the firm says," the article said.
According to Moody's Analytics, the ratio of home prices to income is now 20.9 percent lower than the 15-year average through 2010, and 12.5 percent lower than the 1989-2004 average, the article said.
"Moody's Analytics predicts that the number of distressed sales will begin to fall in 2013, and that prices will begin to edge upward then. Home building is at a virtual standstill, so the supply overhang isn't likely to get much worse. Meanwhile, demographic indicators such as 'household formation' - the number of new households each year - are on the rise and promise to take a bite out of the glut in coming years." the article continued, adding that "the long-term benefits of homeownership remain very much intact" and that "for now, at least, you can deduct the mortgage interest on your taxes - a big perk for people in higher tax brackets."
The article quoted Anthony Sanders, a real estate professor at George Mason University" that "while we might now see rapid growth in the next couple of years, there are a tremendous number of positive signs that could lead to a rebound."
"Once the foreclosure mess begins to clear up, say housing economists, the traditional driers of the housing market - demographics, affordability, loan availability, employment and psychology - should take over," the article maintained
The article noted that Moody's said that new households renting or owning a home picked up a big last year and combined with increased obsolescence and higher demand for second homes should beginning sopping up excess inventory in much of the country over the next two years.
"Rising home prices made renting cheaper than buying in many parts of the country But that dynamic has begun to change: housing affordability, as measured by the ratio of median home prices to median household incomes, has fallen below pre-housing bubble levels in just over two-thirds of the country, according to an analysis of more than 380 metro areas by Moody's Analytics. Renting is still cheaper than buyer in most markets, but rising rents and falling house prices mean that, in some areas this won't be the case for long. Buying a home is already cheaper than renting in Chicago, Cleveland, Detroit and Orlando, Fla., according to Moody's Analytics. In other markets, including Dallas, Las Vegas and Sacramento, Calif., the equation is likely to soon turn in favor of homeownership if current trends persist, the firm says," the article said.
Architecture Critic
Carter Horsley
Since 1997, Carter B. Horsley has been the editorial director of CityRealty. He began his journalistic career at The New York Times in 1961 where he spent 26 years as a reporter specializing in real estate & architectural news. In 1987, he became the architecture critic and real estate editor of The New York Post.
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