With all of the focus on the foreclosure and short sale market most people assume that the main reason for excess home inventory people losing their homes.
While this of course contributes to the problem recent statistics released by the Census bureau show another trend. There has been a significant drop in the number of new households that are being created. The study showed that during the five year period of 2002- 2007 almost 1.3 million new households were being formed each year. Starting in 2008 the number dropped to just under 400,000 and decreased even more in 2009 to just over 350,000. That is an astounding drop of 900,000 fewer households started.
In tough economic times people tend to downsize, move in together, delay home purchases and younger people will stay at home longer. In the worst case scenario of course some poeple actually become homeless. Other factors contributing to the downward trend is a reduction in immigration and marriage rates. In fact some studies cite immigrants that have actually moved back out of the United States.
These are interesting statistics and show a much broader cause and effect cycle to the housing situation. As always real estate is local and in the Palm Springs market we are not seeing an oversupply of homes. Our inventory is at a two year low and sales remain very respectable. Further, as so much of the market here is second and vacation home based our numbers and statistics won't line up with more year round markets.
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Yesterday, November 18th, the Treasury Department issued a statement about the measures the government is taking to help home owners in distress. It is interesting to read for two reasons. One if you are in a modification program you can compare what you are being told and what the governments stated objective is for that program. Two, if you are wondering what options are really out there and confused by the media coverage it is spelled out pretty clearly in this speech.
