Potential homeowners team up to sit out housing recovery
Posted on Monday, November 3, 2014 at 9:00:18 AM
For many homeowners, higher home prices, a smaller inventory and a tighter economy have kept them on the sidelines until the housing market recovery drives forward.
While conditions have improved greatly, many potential homeowners are teaming up to cut costs while they wait for a more favorable time. According to Zillow, Americans are moving in together to prevent housing costs from getting too high. For example, household size has ticked up from 1.75 adults in 2000 to 1.83 adults in 2012. More than a third of all adults now live with roommates or family.
Despite these trends, Zillow chief economist Dr. Stan Humphries pointed to the positives.
"Like a coiled spring, all of these doubled-up households represent tremendous potential energy for the market," he explained. "If and when these compressed households begin to unwind and these millions of Americans do start to create their own households, demand will bounce back, possibly even causing household growth to outpace population growth."
In addition, a recent report from S&P Dow Jones Indices showed that there is more good news for potential homeowners. The pace of home price gains across the country has slowed, with the National Index only increasing 5.1 percent in August compared to 5.6 percent in July.
With lower residential financing rates, more favorable home prices and other improved conditions, homebuyers may be able to get off the sidelines sooner, rather than later.