Harvard: Real estate recovery hinges on demand.

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Harvard: Real estate recovery hinges on return of demand

Household formation has plummeted and credit remains tight

By Inman News
Inman News™

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A pickup in household formation and access to mortgage credit are critical factors in spurring a lasting recovery in housing, researchers with the Joint Center for Housing Studies of Harvard University concluded in the latest annual "State of the Nation's Housing" report, released today.

While job growth and consumer confidence remain key to an economic recovery, the "Great Recession" has crimped demand for housing by slowing immigration and the creation of new households by young and middle-aged adults.

Estimates vary, but Harvard researchers say Census data shows household growth averaged about 500,000 per year in 2007–10 -- less than half the 1.2 million annual pace averaged in 2000–07. While builders have cut back drastically on home production, a more normal rate of household formation is needed to absorb the current glut of foreclosed and distressed homes, the report said.

An estimated 3.8 million baby boomers will need to downsize in the next decade, creating demand for smaller homes, and "the echo boomers" coming up behind them could represent a fresh supply of first-time homebuyers -- if they can find jobs and qualify for loans.

But even as echo boomers -- those born in 1986 and later -- enter their peak household formation years, household growth has plummeted as young adults delay setting out on their own and immigration slows.

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Curt Baumgarth

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Century 21 All Star Realtors

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About Curt:  Curt Baumgarth is an AZ License Realtor, MAOM educated,  SEVAR member, a Certified Distressed Property Expert and longtime resident of the Valley of the Sun.  Curt is a former Police Officer in the valley and also has several investment properties and is more than happy to share any of his vast experiences and knowledge with you.

Are you considering a Foreclosure or Short Sale, contact Curt Baumgarth, who is a Certified Expert in Distressed Properties and can give you honest answers and guide you through the complicated procedures that it takes to SUCCESSFULLY complete such a sale or purchase.

Contact Curt if you are interested in buying or selling any type of residential property in the greater Phoenix, Scottsdale, Tempe, Mesa, Gilbert, Chandler, Queen Creek area. 


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Mike Carlier
Lakeville, MN
More opinions than you want to hear about.

Tell me if I have this wrong, but it looks like Harvard has determined that, if there are more people who are willing and able to buy houses, more houses will be sold.  I would have never guessed!

Jun 08, 2011 06:56 AM #1
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