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18 HOUSING TRENDS: THEN AND NOW e Great Recession ended 10-years ago in June. In a new blog, Odeta Kushi, Deputy Chief Economist, First American compared the housing market trends at that time with the current numbers to analyze how far the housing market has come over the past decade. For the analysis, Kushi studied the housing demand metrics, supply metrics, and homeownership metrics. ese were scaled relative to their level at the end of the Great Recession. "Today's housing market enjoys much stronger demand than a decade ago, but housing supply has slumped," Kushi observed. "More house-buying power and expanded access to credit, along with a demographic tailwind from millennials aging into prime home-buying age, all bode well for housing market demand. e question is whether there are enough homes for sale to meet this surging demand." She noted that affordability has improved since the end of the Great Recession largely due to lower mortgage rates and rising household income. In fact, mortgage rates in April were 1.3% lower than those in June 2009. At the same time, consumer house buying power has increased by 54% over the past 10 years. Similarly, credit availability has improved by 30% over this period. As reported by MReport, in a recent episode of e Exchange on CNBC, Skylar Olsen, Economic Research Director, Zillow, had also observed that the fall of mortgage rates gives many "reason to believe" that the current coolness in the market wouldn't last long. e challenge today, according to Kushi is the lack of supply. She noted that inventory turnover has declined by 16% since June 2009. "A major reason for the lack of homes for sale is increasing tenure–the length of time a homeowner lives in their home," Kushi said. "In the years following the recession, tenure has rapidly increased and it is currently more than 11 years, compared to just under seven years at the end of the Great Recession." While building new homes might seem like a natural solution to solve this issue, Kushi noted that for more than a decade, "home building has not kept up with the demand for shelter." "While housing starts, a leading indicator of new home completions, have doubled since the lows reached at the end of the recession, they remain 33% below their 2000 level," she said. According to Olsen, slowing home value appreciation was also a concern. "Home value appreciation is slowing down fairly significantly in those expensive markets. e percentage of listings that have price cuts have shot up as the housing market starts to transition." Olsen said. WHY INVESTORS ARE WARY OF HOUSING Although the housing market is booming and mortgage applications increasing by 40% to a three-year high, insight from Forbes found investors may still be wary of investing in housing. "I understand why no one wants to hear about housing. But you should want to hear about housing, because the evidence is overwhelming," the article states. Rebounding from the housing crash of 2008, Forbes states that 2018 was also a "terrible year for housing," as mortgage rates rose for the first time in five years, and the U.S. Home Construction ETF dropped 32%. e report, however, states that the market is nowhere near a bust, and that housing is still affordable for most Americans. Unisom's 2019 Home Affordability Report, however, stated it now takes 14 years for those making a median income to save for a 20% down payment on a median-price homes, meaning many prospective millennial homebuyers won't achieve homeownership until their 40s. e report states that the monthly payment needed to support a home purchase with a down payment of 20% grew by 12% between 2017 and 2018, far outpacing the growth of income during that period of 6%. e Forbes report also downplayed the notion that millennials will not enter the housing market. "Census Bureau figures show the number of households in America just hit an all-time high at 122 million," the report stated. A survey from SunTrust found that more millennials are focusing on homeownership before marriage, as the survey found that among more than 2,000 U.S. adults, nearly half of millennials (aged 22-38) who have been married say they and/or their spouse owned a home before marriage (48%), compared to only 35% of baby boomers (ages 55-73). "People are choosing from many different paths and reaching common life milestones at a wider age span than before, changing when they decide to purchase a home," said Sherry Graziano, Mortgage Transformation Officer at SunTrust. e survey also found that an increasing number of couples are entering marriage where both individuals own a home. According to the survey, 25% of unmarried women and 21% of unmarried men said, if faced with this decision, they would prefer to sell both places and buy a new one after getting married.

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