Every year the Joint Center for Housing Development at Harvard University releases a report that analyzes the state of the Nation's housing. The 2008 report has just been released and its findings are now being discussed on financial sites across the Web. It's a great tonic for the housing market and even in these dark times, manages to find the ray of light. Before I divulge their 2008 Outlook, though, I thought I would step in the Financial Take Me Back Machine(TM) and give you a glimpse of what they have said in previous years' reports (yes, I have trademarked that term and you will be seeing more of the FTMBM - har!).
Here's what the report predicted in 2004
Despite growing concern over the pace of development, housing construction over the next 10 years is likely to exceed that over the last 10. The Census Bureau’s newly revised population estimates imply that household growth from 2005–15 will be as much as 1.1–2.0 million more than the Joint Center for Housing Studies previously projected. Add to that the growing demand for second homes and replacements of units lost from the stock, and the total number of homes built in 2005–15 could reach 18.5–19.5 million units. This compareswith 16.4 million homes added in the 1990s..
Here's what the report had to say in 2005.
Thanks to immigration, household growth is likely to accelerate over the next 10 years. With family reunification laws and the extraordinary appeal of the open US economy, the number of new arrivals could easily top the 1990s record of about 10 million. As a result, immigrants are expected to account for about one-third of net household growth in the decade ahead.At the same time, the children of immigrants who arrived in the 1980s and 1990s are about to become a force of their own in housing markets. These second-generation Americans now account for 21 percent of children between the ages of 1 and 10, and 15 percent of those between the ages of 11 and 20. If history is any guide, members of this generation are likely to out-earn their parents and thus become an even greater source of housingdemand in the next two decades.
"...the housing sector continues to benefit from solid job and household growth, recovering rental markets, and strong home price appreciation. As long as these positive forces remain in place, the current slowdown should be moderate. Over the longer term, household growth is expected to accelerate from about 12.6 million over the past ten years to 14.6 million over the next ten. When combined with projected income gains and a rising tide of wealth, strengthening demand should lift housing production and investment to new highs."
In the 2007 report we get good news amidst the start of the housing problems.
"Yet however long the correction lasts, housing markets will eventually recover. Once excess inventories and credit problems are worked out and balance is restored, ongoing demand for new and improved homes promises to lift the value of new construction and remodeling to new highs. Greater productivity will help raise real incomes for many, while record wealth will allow households to spend more on housing. But between strong growth in demand and increasingly restrictive development regulations, house prices will continue to move up. The number of new homes demanded will also increase, thanks to immigration trends and the aging of the baby-boom and echo-boom generations. Over the next 10 years, the baby boomers will pass through the age range when second-home ownership peaks, while the echo boomers will move into the prime household-forming"
The positive long-term news continues in the 2008 report:
"If the economy slips into a severe recession, the prolonged contraction could drive down the sustainable level of housing demand by slowing the loss of older units, forcing more households to double up, and reducing sales of second homes. But in the case of a mild downturn, which most economists expect, the fundamentals of demand are likely to drive a strong rebound in housing once pricesbottom out and the economy begins to recover. "
So, there you have it. So if you own a house that is underwater or are adding debt like mad, don't despair, based on five years of analysis it looks like everything with housing will eventually be allright. If you believe the guys and girls at Harvard.
