August 20, 2013
JUST WAIT 'TIL AMNESTY GOOSES THE MARKET:Housing: From Bubble to Bottleneck (Robert Samuelson, August 19, 2013, Washington Post)
.Posted by Orrin Judd at August 20, 2013 2:12 PM
All this has muffled housing's recovery. Although sales, prices and building are rising, they don't fully reflect pent-up demand. Construction starts on new units remain less than 1 million annually when underlying demand is 1.7 million, figures economist Mark Zandi of Moody's Analytics. Demand reflects the formation of new households (67 percent), the demolition of older structures (21 percent) and second homes (12 percent).
Superficially, the case for stronger growth has seemed airtight. Five years after the financial crisis, foreclosures have abated. Interest rates remain low. For most of the past year, they averaged about 3.5 percent on 30-year fixed-rate mortgages; now they're about 4.4 percent. Affordability is high; low rates and low home prices keep monthly payments down. [...]
Heavily dependent on credit, housing is straining to get it. The whole sector has moved from bubble to bottleneck. Its contribution to the recovery may disappoint. First-time and minority buyers especially struggle to borrow. "We all agree that credit was way too loose [in the bubble]," says Goodman. "But credit is way, way tighter now than it was in 2002 and 2003" before the bubble, she says.