The housing market is only about three-quarters of the way back to what is considered “normal,” when factoring in new-home construction, existing-home sales, prices, mortgage delinquencies, and the Millennial employment rate, according to a newly released report by Trulia.
Two particular areas holding back the return to normalcy are employment among the Millennial generation and the delinquency rate, according to the report.
Existing-home sales and prices appear to be mostly driving the overall recovery, and more gains are expected in 2015. The National Association of REALTORS® reported that existing-home sales were up 2.1 percent in November compared to a year prior. Pending home sales — a forward-looking indicator based on contract signings — were up 4.1 percent year-over-year, the highest annual gain since August 2013, NAR recently reported.
“With rents now rising at a seven-year high, historically low rates and moderating price growth are likely to entice more buyers to enter the market in the upcoming months,” Lawrence Yun, NAR’s chief economist, said in a statement.
On the other hand, the weakest area of recovery in the housing market seems to be centered in employment among 25- to 34-year olds. Young professionals’ employment is only 46 percent back to normal levels, although there have been some notably recent gains on that front lately. Employment of young adults reached 76.4 percent in December, up from 75.5 percent a year ago. That’s the highest its been in six years, according to the Bureau of Labor Statistics.
Loan delinquencies are another thorn in housing’s side. More than 1 million properties had foreclosure filings in 2014, according to RealtyTrac data. While that marks the lowest level since 2006, the foreclosure rate has not returned to normal quite yet. Foreclure starts soared to a 17-month high in December as lenders worked to clean out a backlog of delinquent mortgages. This will postpone the return to more normal foreclosure levels for about two more years, according to CoreLogic economists. That said, the pool of distressed loans does not appear to be increasing. The high number of loan delinquencies in many areas can be attributed to significant delays in the foreclosure process.
“The housing market is so desperate for lower-priced homes right now that as these properties are repossessed and put up for sale, they should be swept up by buyers relatively quickly,” CNBC reports.
Source: “Housing Is About 75% Back to Normal: Report,” CNBC (Jan. 15, 2015) and “Pending Home Sales Show Modest Gain in November,” National Association of REALTORS® (Dec. 31, 2014)
