We spend a lot of time blogging about everything surrounding the places we live — homes, markets, interest rates, maintenance, etc…. But of course, even more important are what goes inside our homes: us. America has always been a melting pot, but just how diverse we are may surprise you. Each year, the Census Bureau releases data on the languages spoken in American homes. Quartz has a great write-up on the over 300 languages spoken in U.S. houses.
This blog has covered a few times the impact that foreign affairs can have on the U.S. housing market, but sometimes it can be useful to look not just at direct impact, but at global comparisons. Jonathan Lansner over at The OC Register did us the favor of compiling a bunch of global data into a spreadsheet and summarizing the results. The net results is that the U.S. recovery is good by global standards (8th largest home price increase since 2011), but that there’s room for concern.
Literally every day there are prognostications about the rate of mortgage applications, based on projections of future interest rates. You know what? That’s crazy. And it’s even crazier to make your purchasing decision on projected rate moves. Sure, 1/4pt here or there makes a big difference over 30 years. But in 1972 the average annual interest rate was 7.38%. In only got that low again twice before the new millennium. Don’t buy so much house that 1/4 pt change is the difference between affording it or not. Buy a house you can reasonable afford, while mortgage rates are still crazy low by any measure.
One of the most interesting things about America is the relationship between the state and the federal governments; and the corollary, what should federal policy be for such a large and diverse country. When it comes to housing, it seems that the government holds two conflicting opinions at the same time: housing should always be both affordable and a good investment. Daniel Hertz explores this interesting question in-depth in his article, “American Housing Policy’s Two Basic Ideas Pull Cities in Opposite Directions”.
With the U.S. housing market completely (or at the very least, nearly) recovered, it’s may seem like it’s getting harder and harder to find good investment properties. But the truth is, with the increase in rents, now may still well be a great time to invest in property. Canadian Business wrote an article with their advice on How to Invest in The Strengthening U.S. Housing Market. While clearly targeting foreign investors, the advice is pretty sound for local investors as well.
A tangential item of note that’s come up a few times is that the size of the average American home is on the rise — in fact, up almost 30% since 1970. And that’s averages — new homes are up 60% compared to the early 70s. One interesting side effect of this is that we’ve effectively wiped out all of the energy gains we’ve gotten from more efficient appliances, insulation, etc… However, Vox has an interesting take on this. It turns out, there are other factors at play, as well.
As we reported Friday, it is true that at least statistically it is harder for blacks and hispanics to get mortgages than it is for whites and asians. However, while the news isn’t necessarily good, it’s not completely dire, either. At least we can say that the picture is improving. Conventional loans for blacks, for example, had approval rates improve by more than 4 full percentage points from 2013 to 2014. According to the statistics, we still have a long way to go, but at least the trend is in the right direction.
The problem with averages is that pretty much no one is average. While it’s fairly clear that the housing market as a whole has recovered, Business Insider correctly points out that the recovery is divided by age, race, and location. The location part is fairly obvious, as could be seen in yesterday’s blog post. We touched on these other two issues before, too: Millennials face a higher cost of entry than their parents, limiting options for first-time buyers; and black and hispanic homebuyers lag asians and whites.
As you’ve seen, the data are up and down on the state of the housing market. The Economist has done an exciting job of aggregating data from Zillow, and producing five interactive charts. The charts cover data from Q1 1980 all the way through Q2 of this year. They also address 24 major markets, and the U.S. as a whole, and encompass the housing price index, prices in real terms, price:income ratio, price:rent, and percentage change. Have fun with the data!
