Commercial PropertyRealty Times TV: Housing Starts To Reach Second Highest Year Since 1972
If you"ve been wondering whether to buy or sell in 2005, you won"t go wrong either way. Leading housing economists suggest that 2005 will go on record as the second highest year for sales since 1972.
That"s the year total housing starts -- multifamily and single-family -- reached 2.36 million units, and the year that today"s average homebuyer was born.
Would you like to know what"s changed for homebuyers over the last three decades? For one thing -- the ability to get credit. In 1972, conservative lenders were extremely reluctant to give a single woman a loan to buy a home without a co-signer. In fact, women used co-signers to get credit cards and married women were not issued credit cards in their names without their husbands" signature! Today women not only outnumber men, but single women make up 18 percent of the homebuying market!
You"ve come a long way, baby!
In addition, loan products have changed. The 20 percent down payments required by mortgage lenders in 1972 seem antiquated in today"s market where zero down, interest only, and adjustable rate loans are gaining in popularity. The reason? Homebuyers have changed, too. They are more nomadic than ever. Today"s homebuyer stays put only about 5.2 years, making 30-year fixed-rate mortgages too expensive for many.
So for those of you who are wondering if real estate is in a bubble, keep in mind that one of the reasons for the expansive housing market is opportunity. More people are able to buy homes today than in 1972 because lending standards have relaxed and homebuyers are more plentiful.
Both new homes and existing homes are likely to beat past records this year.
According to the Commerce Department, June housing construction starts were down 2.5 percent, but building permits increased by about the same amount, meaning future construction will be on track to reach an annualized rate of 1.649 million new homes.
That"s a record year for single-family new home construction.
Existing homes -- those homes that have been titled to at least one owner will also beat last year"s record if sales can reach the 6.97 million homes that the National Association of Realtors predicts.
David Lereah, NAR’s chief economist, says, "The housing expansion is continuing. Earlier this year, we expected 2005 home sales to be the second-highest on record, but monthly sales have been at or close to record levels. Although we should come off of sales peaks in the months ahead, mortgage interest rates have remained lower than expected, and job gains are providing additional stimulus, meaning unprecedented sales totals this year."
Lereah says that there is still a national shortage of homes available for sale, which is being exacerbated by shortages of some building materials, and that can impact prices. He expects the national median existing-home price for all housing types to rise 9.4 percent this year to $202,600. The typical new-home price will increase 5.8 percent to $233,900.
So with prices continuing to go up, Realty Times recommends that buyers don"t sit on the sidelines.
Grab your piece of the American Dream now.