Housing Activity Will Remain At High Levels In 2005 And Beyond
By James F. Smith
Dr. Smith is chief economist for the
Society of Industrial and Office
REALTORS® and a senior fellow
and director of the Center for
Business Forecasting at the Kenan
Institute of Private Enterprise at
The University of North Carolina.
His economic forecasts are regularly
quoted in USA Today, The Wall
Street Journal, and other media
around the world. During a 30-year career, he has been
an economist and analyst at the Federal Reserve Board;
the National Association of REALTORS®; Sears,
Roebuck and Co.; Union Carbide Corporation; the
University of Texas at Austin; and Wharton Econometric
Forecasting Associates (now Global Insight). He is a
past president of NABE and a past co-chair of the
European Council of Economists. He earned his B.A.,
M.A., and Ph.D. degrees at Southern Methodist
University.
There is no evidence of a housing “bubble” in the
United States and housing demand should stay strong
for years to come. Three major factors lead to this conclusion.
First, the 77 million baby boomers are
approaching the peak home ownership ages of 65-75
(over 83.0 percent versus a national average in 2004 of
69.0 percent). Second, immigrants, a growing share of
the U.S. population, tend to buy houses ten years later
than people born in the United States of the same
income group and family size. Third, mortgage rates
are not likely to go high enough (8.0 percent or more
for 30-year fixed rate mortgages) to put a crimp in demand. Despite some areas of concern, overall homeowners’
equity is at record levels above $9 trillion.
Delinquencies are still less than one percent of mortgages
outstanding.
By James F. Smith