April 29 - New data out Tuesday show housing prices on the rise. But the housing sector in general has experienced a fundamental shift in the post-recession economy. Lily Jamali explains.
The U.S. housing sector just doesn't offer the shelter it used to. A slew of recent data, from homeownership levels to home prices, reveals a change in the sector's role in the economy. Josh Rosner is Managing Director at the research consulting group Graham Fisher & Co: SOUNDBITE: JOSH ROSNER, MANAGING DIRECTOR, GRAHAM FISHER & CO. (ENGLISH) SAYING: "We have to recognize: housing is going to lag, rather than lead a recovery largely because we need the jobs to get first-time homeowners into the purchasing market." Census Bureau data released Tuesday shows the rate of U.S. homeownership falling to the lowest level in almost 19 years. The current rate is 64.8% compares to a high just shy of 70% a decade ago. Some of that is because people are starting families later in life, says Stan Humphries, chief economist at real estate database Zillow. He expects household formation to normalize. SOUNDBITE: STAN HUMPHRIES, CHIEF ECONOMIST, ZILLOW (ENGLISH) SAYING: "As it does, that will create some more demand for housing. But I think a lot of that new demand created by new households is going to be on the renting side of the ledger, not on the owning side." That trend towards renting represents a fundamental shift in the post-recession economy, according to many experts. Census data shows housing starts haven't returned anywhere close to where they stood before the crisis. SOUNDBITE: STAN HUMPHRIES, CHIEF ECONOMIST, ZILLOW (ENGLISH) SAYING: "We're not going to perhaps ever get back to those levels of housing construction." Economists say there are some reasons for optimism. Tuesday, the latest S&P/Case-Shiller index of home price values showed a continuing upward march, although the year-over-year change shows growth is slowing down. Economists say the recovery in home prices and mortgage rates have left some priced out. David Blitzer is Chairman of the committee: SOUNDBITE: DAVID BLITZER, CHAIRMAN, S&P CASE-SHILLER INDEX COMMITTEE (ENGLISH) SAYING: "Prices are clearly good. They're still going up. But if one says, what's the housing sector doing for the U.S. economy? The answer is: not as much as we'd like to see it do." That may be in part because private equity investors buying units in depressed markets - helping fuel what seemed to be a housing recovery over the last three years. James Lockhart is Vice Chair at WL Ross. SOUNDBITE: JAMES LOCKHART, VICE CHAIRMAIN, WL ROSS AND CO. (ENGLISH) SAYING: "From our standpoint, we've invested around the housing market quite a bit. And they've turned out to be great investments." But the private equity bonanza appears to be on the wane, and with it, hopes for a real housing recovery.