Buckfield Maine Area Homes For Sale 04220

Posts Tagged ‘foreclosure’

According to the Boston Globe, recent reports from Freddie Mac reported rates on fixed mortgages again fell to their lowest levels in decades the week of Nov. 8th, with the average interest on 15-year loans dipping to 3.57% from 3.63% a week earlier. The average interest rate for 30-year loans slid to 4.17% from 4.24 percent. That is the lowest since 1971. The Globe went on to note that the impact of favorable borrowing costs is being somewhat dimmed by a high rate of joblessness, foreclosure and tight credit.

I was just reviewing some information from “The State of the Nation’s Housing,” a report issued each year by the Joint Center for Housing Studies at Harvard University. It is an overview of the U.S. housing market including analyses of market forces, demographic drivers, rental housing, and challenges for the future.

Something in the report caught my eye: A contributing factor to lower household growth was a drop in household headship rates caused by “doubling up.” In other words, some people were forced into combining households to save money during difficult financial times, possibly due to loss of their home or by foreclosure. Household headship rates for all age groups have also fallen since 2005, especially among those under age 35.

Of course, what is going to happen to headship rates in the future remains uncertain. If economic conditions and the foreclosure crisis do not improve, rates may continue to fall. But given the improved affordability conditions, employed workers may soon form households and thus boost headship rates. In most cases, doubling up is only a temporary solution for people — they will eventually prefer to find their own places to live.

The good news, according to the Joint Center, is that the “echo-boom” generation — those born between 1986 and 2005 — will have a tremendous impact on starter homes over the next 15 years. The echo-boom generation, currently at 80.8 million, is even larger than the baby-boom generation. It is projected to grow to 92.9 million by 2025. Meanwhile, baby boomers will boost demand for senior housing.

For household formation to return to normal rates, improvement in the unemployment rate is critical. One study estimates that if unemployment rates fall by a little more than 2 percentage points by the end of 2012, household formation would increase by about 2 percentage points from current levels by 2012.* That would mean that by 2012, normal rates of household formation should come back — roughly around 1 to 1.5 million new households per year.

More good news? Meservier and Associates is prepared to assist both the boomers and the “echo boomers” with their searches for new homes!

*Gary Painter, “What Happens to Household Formation in a Recession?” (Washington, DC: Research Institute for Housing America, 2010).