Veteran housing economist David
Berson, formerly of Fannie Mae and PMI Group, shares his thoughts on
what the public needs to know about the housing market this year.
First, he predicts that 2014 will be the strongest year for housing
activity since prior to the recession. Most economists expect an
improved job market in the months ahead, with employment growth
accelerating and the jobless rate continuing to fall. This will be the
key factor improving housing demand in 2014, even if mortgage rates
climb and affordability declines.
Additionally, demographics should start to favor housing activity. To
this end, the demographic factor most affecting the residential
property sector is household formation. "Household formations are
affected by the job market, as people 'double-up' when worried about
their job and income-earning prospects," Berson writes. "The Great
Recession and the modest job recovery in the years following induced
many people who might have lived independently to move in together."
Berson and colleagues estimate the economy is short by more than 3
million households. If the economy expands at a faster clip in 2014,
bringing a more rapid rate of job creation, that should translate into
more households, which in turn should raise housing demand.
Finally, Berson says mortgage availability should not worsen between now and the end of December and may actually expand.
Source: "Economist: 3 Major Things You Need to Know About the 2014 Housing Market," Housing Wire (March 17, 2014)