Top Economists Predict Strong Growth in Homeownership and Housing
WASHINGTON, May 26 /U.S. Newswire/ -- The national homeownership rate will likely exceed 70 percent by 2013, and the demand for housing will require the production of about two million new housing units a year, according to a report released today by the Homeownership Alliance. The report, America's Home Forecast: The Next Decade for Housing and Mortgage Finance, written by the nation's top housing and mortgage economists, takes an unprecedented long-term look at the industry and produces forecasts for the next 10 years.
What does the future hold for housing, homeownership and mortgage finance -- not just one year from today but over the next 10 years? This is the question the Homeownership Alliance asked five of the nation's leading economists on housing and mortgage finance: David Berson -- chief economist, Fannie Mae; David Lereah -- chief economist, National Association of Realtors(r); Paul Merski -- chief economist, Independent Community Bankers of America; Frank Nothaft -- chief economist, Freddie Mac; and David Seiders -- chief economist, National Association of Home Builders.
The collaborative economic study provides a comprehensive analysis of the industry, including:
-- Robust demand will require the production of about two million new housing units per year.
-- Total home sales will average about 8.5 million per year.
-- The national homeownership rate will rise above today's record level and will most likely exceed 70 percent by 2013.
-- Home price appreciation should average around 5 percent a year from 2004-2013 but could be above 6 percent if supply constraints continue to tighten.
-- Mortgage originations are projected to average nearly $3 trillion per year, and residential mortgage debt is projected to grow close to an 8.25 percent annualized rate.
"By every measure the nation's housing sector has been the cornerstone of economic strength over the past several years. The American Dream of Homeownership remains alive and well. For current homeowners and individuals and families seeking to buy a home, the economic benefits of homeownership will continue to rise in the years ahead," said Paul Merski, of the Independent Community Bankers of America.
"Household growth along with replacement requirements, second home demand and changes in vacancies will require average production of 1.85 to 2.17 million new housing units per year. Even the lower end of this range is above the production levels of recent decades," said National Association of Home Builders' economist David Seiders.
"Although the national homeownership rate has surpassed 68 percent, there are sizable differences in ownership rates across income levels, among racial and ethnic groups and among different regions of the country. A rising homeownership rate will translate into at least 10 million additional homeowners by 2013 with roughly one half of the gain accruing to minority households," said David Lereah of the National Association of Realtors(r).
"Home price growth that is in line with income growth is sustainable over the long run, even if home price appreciation outpaces overall inflation," explained Fannie Mae economist David Berson. "With the national unemployment rate below 6 percent, extremely low mortgage rates and economic growth accelerating, the likelihood of a decline in home prices at the national level is quite remote."
"America's families will likely need 125 million mortgage loans for home purchase or refinance totaling $27 trillion in mortgage originations. First-time home buyers will remain a major component of the purchase market, buying about 24 million homes over the next decade," said Frank Nothaft of Freddie Mac.
The Homeownership Alliance believes every family in America should have the opportunity to own a home. Despite record high homeownership rates in the United States, millions are striving to reach the American dream of homeownership. Efforts must be expanded to increase homeownership opportunities. To ensure more Americans can realize the American dream and become homeowners, policy-makers should ensure that the United States continues to have the most efficient, cost-effective system of homeownership in the world.
To download the report, go to http://www.homeownershipalliance.com.
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Based in Washington, D.C., the Homeownership Alliance is a coalition of more than fifteen organizations committed to ensuring support for the American housing system. Members include Consumer Federation of America, The Council of Insurance Agents & Brokers, The Enterprise Foundation, Fannie Mae, Freddie Mac, Habitat for Humanity International, Independent Community Bankers of America, Independent Insurance Agents & Brokers of America, Local Initiatives Support Corporation, National Association of Federal Credit Unions, National Association of Hispanic Real Estate Professionals, National Association of Home Builders, National Association of Mortgage Brokers, National Association of Real Estate Brokers, National Association of Realtors(r), World Floor Covering Association, National Bankers Association, National Council of La Raza, and National Urban League.
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