Lisa Marquis Jackson, SVP at John Burns Real Estate Consulting, provided a comprehensive perspective on the state of the housing recovery at the 2013 Home Improvement Research Institute (HIRI) Fall Conference in Rosemont, Ill. on Oct. 16.
In her presentation, titled "Clarity on the Housing Recovery," Jackson highlighted strong national housing fundamentals and pointed out that though housing starts are less than half of the way toward a full recovery, existing-home sales have already rebounded and then some, thanks in part to activity in the distressed housing market.
According to Jackson's figures, current existing-home sales are at 5.4 million, surpassing the normal sales activity marker of 4.9 million.
"Looking at things graphically has an impact," said Jackson. "We consider 1.5 million starts to be normal. Right now, we're at 41% of the way back to normal, so there's still a lot of runway here. What's interesting is [that] we've already surpassed what would be considered a normal level [when it comes to existing-home sales]."
Meanwhile, the outlook for housing starts takes a dip in 2017, though they are slated to increase 28% in 2013.
Jackson also took the time to explain the distinction between permits and starts, as the former tends to be more reliable, much as the two datasets correlate. Single-family permits are projected to grow 20% year-over-year, while multi-family permits are slated for 13% year-over-year growth for 2013.
"Clearly, multi-family is a little more volatile than single-family," said Jackson. "And we get questions about [whether] we're in a bubble. Our opinion there is that construction and multi-family is going to continue to grow; our expectation is that it's going to be at a bit of a slower pace than what we saw last year especially, which was pretty extraordinary."
Growth in the rebuild and remodel sector is also a solid prospect. Home sales and household formation are on the rise, which plays into the increased number of people planning home improvement projects.
In spite of this, the homeownership rate has been on a continued decline since 2004 and is expected to bottom at 62.9% in 2015, with 78% of foreclosed homeowners expected to re-enter homeownership. Future generations are expected to be 5% less likely to own, thanks in large part to obstacles in qualifying for mortgages.
Correlating to that figure is growth in the renter market, with growth between 2010 and 2015 projected to be more than double that of the previous five years (8.2 million).
All in all, Jackson advised a cautiously optimistic outlook for the housing recovery, which has been partially sped up by some artificial elements but is displaying steady progress.