Lawrence Yun is chief
economist of the NATIONAL
ASSOCIATION OF REALTORS®.
Learn what the latest
economic indicators mean for
the real estate industry.
Prices & Availability
By Buyer Type
Closing a New
Each day about 8,000 baby boomers turn 65, and
many of them wish to downsize. Given the smaller
size of the Generation X or baby bust generation
(those born between 1965 and 1984), it seems inevitable that a sizable stock of larger homes could be
left sitting on the market. As a result, home prices
could underperform compared to the historical
norm, some economists say. While this projection
sounds logical, it overlooks a source of housing demand that can easily compensate for the generational demand gap: immigration.
The stage is set for Washington lawmakers to
debate this politically sensitive topic in the coming months, and we can only hope the back-and-forth is conducted in good faith from both sides
of the aisle. Regardless of the specifics of any new
legislation, the implication for the housing market
largely comes down to simple math: Additional
people mean additional housing demand. Legal
immigrants, about 1 million new arrivals in each
of the past 30 years, will be the ones who can step
in to fill the generational housing demand gap.
The rate of home ownership among immigrants is largely a function of how long people have
been in the United States. For those in the country
less than five years, the rate is below 20 percent,
but it climbs to almost 80 percent by their 40th
year. That means past immigration will help boost
current home buying demand and more recent
arrivals will assist future demand.
The drive to own real estate is very strong
among immigrants. We have seen that immigrants are more likely to become home owners
than citizens born in the United States with a similar heritage. In other words, an immigrant from
China may become a home owner sooner than a
native-born American of Chinese descent.
Of course, housing demand alone is no reason
to push for, say, a doubling of immigration rates.
But the impact of easing immigration policy over
the long term may be good for the housing market, which is something lawmakers should keep
in mind as the debates continue. W
Home sales are improving, but NAR analysts say the market
would see at least a half-million more sales a year if lenders
would return credit conditions to historically normal standards.
About half of all borrowers today have credit scores above 740.
That’s 10 percentage points higher than the period just prior to
the boom, 2001–2004, when loan performance was generally
solid. All trend lines are from January 2012 to January 2013.
PENDING HOME SALES
PERCENT OF CASH SALES BY BUYER TYPE
Existing-home sales is a seasonally adjusted annual rate, which is
the actual rate of sales for the month, multiplied by 12 and adjusted
for seasonal sales di;erences. Pending home sales is an index
that measures housing contract activity. An index of 100 is equal to
the level of activity during 2001, the benchmark year. Inventory
measures the number of existing homes on the market at the end
of the month. Buyer and seller tra;c, current conditions, six-month expectations, and time on market derive from a monthly
REALTOR® Confidence Index. Results for January are based on
3,586 responses to 6,000 surveys sent to large and small real estate
o;ces. The survey asks practitioners to indicate whether conditions
are strong (100 points), moderate (50), or weak (0). Some data may
be revised from previous issues.