When it comes to predicting future home prices, nobody really has a clue. It’s very difficult to predict when the market is so heavily manipulated and the erratic decisions of a few key players can completely change the outcome. For example, the federal reserve controls the interest rate stimulus, and although they are currently saying they plan to leave interest rates low for years to come, they could change their minds. The supply of REO on the market is completely at the discretion of a cadre of banks colluding to restrict supply to drive prices higher in order to lose less money on their bad loans from the bubble. This is a cartel, and if it begins to break down, the liquidation of REO may not be orderly, and price may collapse in certain regions, cities, or neighborhoods. Government regulators have turned a blind eye to the bank’s accounting practices by suspending mark-to-market accounting. At some point, and nobody knows when, this will likely be reversed, and lenders will change the rate at which they liquidate their REOs. Government policy makers control housing finance through the GSEs and the FHA. Any changes they make to lending standards or fees could move the market up or down, and there is no way to predict what they will do.
The bottom line is with all these manipulations, anyone who accurately predicts what will happen to future home prices made a lucky guess. The most reasonable hypothesis is for slowly increasing house prices punctuated by brief sharp rallies and deep air pockets caused by short-term fluctuations in supply. The range of predictions out there cross the spectrum from a 20% decline to a 20% rally.
How The Housing Recovery Will Take Shape In Coming Months
Morgan Brennan, Forbes Staff — 9/26/2012
More good news on the home front. The latest S&P/Case-Shiller Home Price Index indicates that home prices gained 1.6% in July compared to a year earlier. Every city tracked in the 20-City Composite has seen prices rise for three straight months and 16 of the 20 cities saw year-over-year increases. “The positive news in both the monthly and annual rates of change in home prices over the past few months signals a possible recovery in the housing market,” noted David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, in a statement.
Blitzer is the latest housing expert to toss around the “r” word. Last week, for example, the National Association of Realtors reported that existing home sales climbed about 9% nationally in August from a year earlier. “The housing market is steadily recovering with consistent increases in both home sales and median prices,” explained Lawrence Yun, chief economist of NAR.
The chorus of bottom callers is getting louder. The discussion is turning from a debate about the bottom to a discussion of what comes next. Perhaps were in the West where the supply constriction is having the best effect such discussions are warranted, but on the East coast where shadow inventory processing is just beginning, the bottom is nowhere in sight.
All that good news begs the question: what can we expect from housing in the coming months?“ We got to the point where housing couldn’t fall any farther,” notes John Canally, an investment strategist for LPL Financial.
That’s nonsense. House prices easily could have fallen much further. If interest rates hadn’t been pushed down to 3.5%, and if regulators had not suspended mark-to-market accounting which delayed millions of foreclosures and subsequent liquidations, prices would have fallen much, much further. There is still downside risk in the market.
“Seven years into it and we are finally seeing a turnaround — but it will be modest at best.”
Canally likens the national-level housing market recovery to a “crooked U” in shape: home prices fell dramatically from 2006 through 2009, then bounced along an uneven bottom (falling a bit more following the expiration of the 2010 home buyer tax credits) for three years before finally beginning to turn upward in recent months.
He can characterize the shape all he wants. The bottom was an artificial flattening created by a series of stimulants engineered by the government and federal reserve. The recovery may be a head-fake caused by continuing stimulants, or it may be real if the stimulants are removed slowly as prices recover.
Lauren Pressman, director of real estate at Aspiriant, also believes housing is making a U-shaped rebound. “It does seem that we are on solid ground for a recovery, or least no more continued depreciation in home prices in most markets,” says Pressman. Yet she doesn’t expect prices to rise dramatically any time soon, thanks to the lackluster jobs market, an overhang of distressed shadow inventory, and ongoing credit issues.
The lackluster job market, overhang of shadow inventory, and credit qualification issues will certainly weigh on prices. What we are all groping in the dark to evaluate is how much of a weight these forces will be. None of us knows because these aren’t typical market conditions subject to laws of supply and demand.
Stan Humphries, chief economist at Zillow.com, has expectations that echo Pressman’s. “We think the bottom is going to be a long flat affair where home value appreciation over the next two to four years, depending on the market, will be in the 1-3% range,” explains Humphries. Zillow’s formal home value projection (which includes all homes, listed for sale and off the market) entails a 1.1% rate of appreciation from June 2012 through June 2013. Humphries believes a healthy (non-bubble) 2.5-5% rate of appreciation won’t kick in until sometime between 2014 and 2016.
That’s as reasonable a guess as any. All the major market manipulators are intent on creating some level of appreciation. Counterbalancing their desires is the realities of unemployment, shadow inventory, and a depleted buyer pool. Tepid appreciation is the safest prediction to make.
Yet housing inventory levels are down and new construction will take years to move through the development pipeline. Realtors in some markets, like Phoenix, Miami and San Francisco, even report bidding wars. The rapidly diminishing supply of sought-after inventory has some analysts making larger projections. NAR estimates prices of existing homes will rise 10% cumulatively over the next two years.
The NAr is such a joke. Why would anyone predict a 10% cumulative appreciation over a two-year period? Why not say 5% appreciation next year? Is it because prediction 10% appreciation sounds more bullish? Of course it is. The bullshit and spin the NAr puts out is insulting to the intelligence of buyers everywhere.
Barclays equity research division warns that a possible shortage of quality inventory could even fuel a “dramatic, multi-year recovery in home prices that could drive prices up 5% to 7% per year through 2015,” according to my colleague Agustino Fontevecchia.
For as ridiculous as that sounds, I foresee a multi-year period of 5% to 7% appreciation in the most beaten down markets but not until after the shadow inventory is liquidated. We must endure a multi-year flat period while shadow inventory is liquidated. Lenders would prefer that flat spot be at peak prices so they can recover their capital, but with prices 30% ore more below the peak in most markets, it isn’t likely lenders will have their dreams come true.
Home Prices Unlikely to Come ‘Roaring’ Back, Case Says
By Prashant Gopal on September 25, 2012
U.S. home prices, which climbed more than forecast in July, are unlikely to come “roaring” back as the housing market reaches bottom, according to Karl Case, the economist who co-created the S&P/Case-Shiller index.
The gauge of property values in 20 cities rose 1.2 percent from July 2011, the biggest 12-month jump since August 2010, a report from the group showed today in New York. The median forecast of 23 economists surveyed by Bloomberg called for a 1.1 percent gain.
A forecast of modest appreciation is the safest call, so that’s what most economists will predict.
“We’re at a bottom but I don’t think we’ll come roaring out of here,” Case, professor emeritus at Wellesley College in Massachusetts, said today on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt. “You’ve got problems in the economy, problems abroad, and got the demographics to worry about.”
Most economists haven’t spoken about the problems with demographics. The baby boomers are soon to retire, and many will want to sell and downsize. The generations following are saddled with excessive debts, and there are fewer of them. Many boomers may not find buyers for their houses, at least not at the price they want.
Record-low mortgage rates, a smaller share of sales of foreclosed properties and low inventory are boosting prices, Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts, wrote in a note to clients today. Further gains may be held back by an overhang of distressed properties from homeowners in default or foreclosure, he said.
“We are expecting prices to continue rising, but not much faster than inflation, at least over the next five years,” Newport wrote.
I’m expecting prices to rise at about the rate of inflation for the next several hundred years because prices can’t appreciate faster than inflation over the long term. Prices are determined by wages, and inflation keeps pace with wages because people bid up the value of goods and services with their wages. Houses can’t appreciate faster than inflation any more than trees can grow to the sky.
GARY SHILLING: Here’s Why There’s No Housing Recovery And Prices Will Collapse Another 20%
Matthew Boesler | Sep. 19, 2012, 5:18 PM
Everyone thinks the housing market in the U.S. looks like it’s starting to bottom.
Famed economist Gary Shilling is not one of them—you could call him notably bearish on housing.
In fact, he expects prices to drop another 20 percent from here and doesn’t think we will see a bottom in the market for another several years.
The main reasons Shilling is so pessimistic: There is a huge supply of excess inventory not being accounted for, and prices still have not fallen to anywhere near long-term historical averages.
In his monthly INSIGHT client newsletter, Shilling outlined his bearish housing thesis and used several charts to illustrate why he thinks there is no bottom in sight for the U.S. housing market, and more pain is ahead for American homeowners.
Based on historical trends, there are still about 2 million excess housing inventory units
That’s such a huge number because the number of new housing starts and completions before the collapse was only about 1.5 million per year
The fact that housing starts and completions has been at all-time lows for four consecutive years is a good sign for housing. We did not continue to overbuild once the problem became apparent.
Many point to measures of decreasing supply as bullish for housing…
…but those numbers don’t take into account around 5 million delinquent mortgages and foreclosures that add to supply…
…and they also don’t include all of the vacant units that aren’t currently listed for sale
Home prices need to drop another 22% to reach their 1890-2000 long-term average
The chart above is inflation-adjusted home prices. It is likely that houses will fall back to their inflation-adjusted price levels over time. However, this can happen in one of two ways: price declines, or inflation. The federal reserve is intent on making it the latter. Our super low interest rates will likely prevent further nominal price declines, but we will pay for this nominal price stability in housing with price inflation in other goods and services. In my view, nominal prices may bottom, but inflation-adjusted prices will still decline through inflationary pressures created by low interest rates. It’s only a matter of time.
Livin’ large on her ever-expanding HELOC
Most Ponzis from the bubble era simply used their properties like an ATM machine until it no longer provided supplementary income, then they walked away from the debt. The reality is these people never expected to pay back this money. It was always going to be someone else, probably a future buyer who was going to pay the bills. With that foolish mindset, borrowed money becomes looked upon as free money to be spent on a whim. It’s no wonder so many people borrowed and spent their homes given the attitude toward debt they harbored.
- Today’s featured REO was purchased on 11/22/2002 for $297,500. The owner used a $238,000 first mortgage, a $59,500 second mortgage, and a $0 down payment.
- On 6/20/2003, she refinanced with a $268,800 first mortgage and a $31,000 stand-alone second.
- On 2/5/2004 she obtained a $100,000 HELOC.
- On 6/30/2004 she opened a $150,000 HELOC.
- On 2/27/2006 she obtained a $200,000 HELOC.
There’s no way to be sure she maxed out her HELOCs and went Ponzi, but why else would she continually go back to the bank and increase her available HELOC balance. She did vacate the house in a foreclosure on 4/9/2012, so her debt problems were larger than her ability to repay. Of course, she never intended to.
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Proprietary OC Housing News home purchase analysis
12809 TERNBERRY Ct Tustin, CA 92782
$359,900 …….. Asking Price
$140,000 ………. Purchase Price
12/28/1995 ………. Purchase Date
$219,900 ………. Gross Gain (Loss)
($11,200) ………… Commissions and Costs at 8%
============================================
$208,700 ………. Net Gain (Loss)
============================================
157.1% ………. Gross Percent Change
149.1% ………. Net Percent Change
5.7% ………… Annual Appreciation
Cost of Home Ownership
——————————————————————————
$359,900 …….. Asking Price
$12,597 ………… 3.5% Down FHA Financing
3.51% …………. Mortgage Interest Rate
30 ……………… Number of Years
$347,304 …….. Mortgage
$99,354 ………. Income Requirement
$1,561 ………… Monthly Mortgage Payment
$312 ………… Property Tax at 1.04%
$38 ………… Mello Roos & Special Taxes
$90 ………… Homeowners Insurance at 0.3%
$362 ………… Private Mortgage Insurance
$204 ………… Homeowners Association Fees
============================================
$2,567 ………. Monthly Cash Outlays
($232) ………. Tax Savings
($546) ………. Equity Hidden in Payment
$14 ………….. Lost Income to Down Payment
$65 ………….. Maintenance and Replacement Reserves
============================================
$1,868 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$5,099 ………… Furnishing and Move In at 1% + $1,500
$5,099 ………… Closing Costs at 1% + $1,500
$3,473 ………… Interest Points
$12,597 ………… Down Payment
============================================
$26,268 ………. Total Cash Costs
$28,600 ………. Emergency Cash Reserves
============================================
$54,868 ………. Total Savings Needed
The property above is available for sale on the MLS.
Contact us for a comparative market analysis, a cost of ownership analysis, or information on how you can make an offer today!
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24 Responses to “Future home prices? Opinions vary widely”
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Since the current price model is based on the continuance of negative real rates, and the incremental cost of debt capital will effect home values in a negative manner, it’s not really that difficult to determine where prices are ultimately headed.
But the question is when. Will the pressures against home prices correspond to future rising wages? Will the withholding of inventory continue successfully?
Well, cheap money (mispriced) is fueling this market. Problem is, it’s flowing directly into speculation so volatility is sky-high…..the death-knell for price stability. And, once a trend shift begins to materialize/validates, with he who exits first always wins ingrained in the minds of speculators, the “when” element could unfold virtually overnight.
The federal reserve must believe their volatility is only to the upside.
You’re right. Cheap money will fuel speculation and volatility. Very little will be invested for the long term.
The California Recovery Is Shriveling Up
California has its own manufacturing PMI, the Inland Empire Report on Business, sponsored by San Bernardino and Riverside Counties in Southern California, commonly called the Inland Manufacturing Index. After the recent high of 60.8 in March—above 50 indicating growth—it zigzagged down to 52 in August, and then in September, it crashed to 43.4—the lowest level since September 2009.
All five key components were weak. And three fell off a cliff: Production tumbled from 55 in August to 37.5 in September; New Orders—a harbinger of pain to come—fell from 52 to 37, and Exports fell from 51.1 to 35.7. “Disturbing,” the report called it.
Read more: http://www.testosteronepit.com/home/2012/10/2/californias-ballyhooed-recovery-oh-dude.html#ixzz28F3vbgmk
Plus California has that global warming cap and trade coming in 2013. Since it’s only in California it will impact business and cost of living. It’s not an normal income tax or sales tax but its a tax. In weird way will impact Debt to Income qualifying ratios. Also, lets not forget increases in federal tax and a possible state taxes coming.
We need .9% mortgage rates
With rising home prices everyone can stimulate the economy with their HELOCs, right?
This report does not bode well for California. Perhaps it is a one-time aberration. We will see.
The bottom-calling cheerleaders are getting louder.
CoreLogic: Home Prices Sustain Recovery with 4.6% Yearly Gain
Home prices continued to trend upwards in August, posting both yearly and monthly gains for the sixth consecutive month, CoreLogic reported Tuesday.
When including distressed sales, home prices in August rose 4.6 percent from a year ago, marking the biggest yearly gain since July 2006. Month-over-month, prices were up 0.3 percent from July to August.
When excluding distressed sales, which are short sales and REO transactions, prices were up yearly and monthly by 4.9 percent and 1 percent, respectively.
CoreLogic’s Pending HPI points to further increases into September. Prices including distressed sales are expected to rise by 5 percent yearly and 0.3 percent monthly.
“Sustained economic recovery in the U.S. requires a healthy housing market. You cannot have a healthy housing market without price stabilization and ultimately home price appreciation,” said Anand Nallathambi, president and CEO of CoreLogic, in a release. “Improving pricing trends over the past few months and our forecast for continued gains in September bode well for a progressive rebound in the residential housing market.”
On a state-by-state basis, all but six states saw price declines.
Including distressed sales, the five states that appreciated the most over a one-year period were Arizona (+18.2 percent), Idaho (+10.4 percent), Nevada (+9.0 percent), Utah (+8.9 percent) and Hawaii (+8 percent).
Rhode Island led with the biggest decline, where prices fell 2.6 percent, followed by Illinois (-2.3 percent), New Jersey (-1.4 percent), Alabama (-0.7 percent) and Connecticut (-0.5 percent).
Phoenix continued to outshine other metros, rising 21.8 percent from August 2011. Houston ranked second, but was still far behind, gaining 6.3 percent during the same period. Washington D.C. (+4.8 percent), Dallas (+4.3 percent), and Los Angeles (4 percent) were also among the top five.
RMBS Working Group Sues JPMorgan for Securities Fraud
New York shook Monday as the Residential Mortgage-Backed Securities (RMBS) Working Group fired its first shot against a major bank.
New York attorney general and co-chair of RMBS Working Group Eric T. Schneiderman announced a Martin Act lawsuit against JPMorgan Chase Bank, JPMorgan Securities, LLC (formerly known as Bear Stearns & Co.), and EMC Mortgage LLC (formerly EMC Mortgage Corporation) for alleged fraudulent practices designed to promote the sale of RMBS to investors.
Schneiderman’s complaint alleges that Bear Stearns led investors to believe that the quality of loans in its mortgage-backed securities had been carefully evaluated and would be monitored, both of which never happened. Instead, the attorney general alleges, Bear Stearns ignored the defects its review uncovered and kept investors in the dark about its review procedures. As a result, the company’s portfolio included many loans made to borrowers who were likely to default – and ultimately did.
Schneiderman’s complaint goes on to accuse Bear Stearns of misrepresenting the loans in its RMBS, saying they were originated following underwriting standards.
“While the ‘due diligence’ review that Defendants represented they undertook should have assessed the quality of the loans deposited into the RMBS, Defendants’ actual due diligence process was very different from their public representations about it,” Schneiderman wrote in the complaint. “Defendants failed to use due diligence as a tool to identify and eliminate the many defective loans that they purchased from originators.”
As a result of Bear Stearns’ and the other defendants’ alleged negligence, investors suffered cumulative losses of approximately $22.5 billion.
In addition, another $30 billion in unpaid principal on mortgages remains in those trusts, 43 percent of which is currently 90 days past due, in foreclosure, or considered REO. Schneiderman and RMBS Working Group anticipate more losses from those mortgages.
According to FHFA Inspector General Steve Linick, the defendants also sold misrepresented mortgage-backed securities to Fannie Mae and Freddie Mac.
The lawsuit is the first legal action from the group, a state-federal task force created by President Obama to investigate the organizations responsible for “misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities.”
“This lawsuit will bring accountability for the misconduct that led to the crash of the housing market and the collapse of the American economy,” said Attorney General Schneiderman. “Our lawsuit demonstrates that there is one set of rules for all – no matter how big or powerful the institution may be – and that those rules will be enforced vigorously.”
More cheerleading…
Economists: Housing recovery finally here
NEW YORK (CNNMoney) — It’s been a long time coming, but economists surveyed by CNNMoney believe the nation’s housing market has finally turned the corner.
Of the 14 economists who answered questions about home prices in the survey, nine believe that prices have already turned higher or will make that turn later this year. Only three months ago, half of the economists surveyed by CNNMoney believed a turnaround in prices would not take place until 2013 or later.
Economists have been encouraged by a variety of readings, including three straight months of increases in the S&P/Case-Shiller home price index, a pick-up in sales of existing homes and home construction and a big jump in the price of new home sales.
Mortgage rates are also likely to remain near record lows thanks to the Federal Reserve’s purchase of $40 billion in mortgages a month for the foreseeable future.
“We’re seeing the signs of a pulse in a sector that has been flat-lined for a number of years,” said Sean Snaith, economics professor at the University of Central Florida.
Determining when the housing market has turned the corner is important for more than home builders and real estate agents. Even before soaring foreclosures sparked a meltdown in financial markets in 2008, the housing market had become a significant drag on the economy. Housing t continued to subtract from the nation’s gross domestic product right up through early 2011.
Multi-family growth might be slowing down nationwide.
Landlord Gains Slow as Homebuying Tops Renting
By Hui-yong Yu on October 03, 2012
Apartment occupancies rose in the third quarter at the slowest pace in more than two years as record low mortgage rates in the U.S. spur would-be renters to purchase homes instead.
Multifamily vacancies fell to 4.6 percent as of Sept. 30 from 4.7 percent in the second quarter, Reis Inc. (REIS) said in a report released today. The decline was the smallest since the apartment recovery began in early 2010, and landlords leased fewer units on a net basis than during the first and second quarters, according to the New York-based research firm.
“We are starting to lose renters to home purchasers,” said Matthew Gardner, principal of Seattle-based Gardner Economics LLC, a land use, real estate and economic advisory company. “As every rental project is increasing its rents and has been for a long time, ultimately it gets to the point where owning becomes cheaper than renting.”
Low borrowing costs are making home purchases more affordable, lifting demand for both existing houses and new homes from builders including Lennar Corp. (LEN), while a shrinking supply of foreclosed homes is easing downward pressure on property prices. Federal Reserve policy makers have targeted the housing market with further accommodation measures to spur growth and reduce unemployment. That’s starting to put pressure on apartment landlords.
Apartment owners had a net occupancy increase of about 22,600 units, down from a gain of 31,000 units in the second quarter and 36,400 units in the first. A year earlier, occupancies rose by 37,600 units, according to Reis.
‘Depress Demand’
“Low mortgage rates have not prompted many households to buy homes, given expectations that home prices will remain flat, but that trend might finally be shifting,” said Victor Calanog, head of research and economics for Reis. “Single-family rentals also appear to be on the rise. All of these depress demand for apartment rentals.”
U.S. mortgage rates fell to record lows last week as the Fed resumed purchases of mortgage-backed securities. The average rate for a 30-year fixed loan fell to 3.4 percent in the week ended Sept. 27, from 3.49 percent the prior week, according to McLean, Virginia-based mortgage finance company Freddie Mac. It was the lowest rate in data going back to 1971.
The median price of all home sales in August was $256,900, up 17 percent from a year earlier, according to the Commerce Department. The increase was the biggest since December 2004, and an 11 percent gain from July was the largest month-over- month gain in records going back to 1963.
Purchases of new U.S. homes rose 28 percent in August from a year earlier, the Commerce Department said on Sept. 26. August new-home sales held close to a two-year high, with sales falling 0.3 percent to a 373,000 annual pace after a revised 374,000 rate in July that was the strongest since April 2010.
At this point they can only make prices tread water with ultra low interest rates. They can’t get home prices to skyrocket again because incomes just can’t support them and I doubt they’ll be bringing back liar loans any time soon.
Yes, as long as loan balances are tethered to incomes based on reasonable debt-to-income ratios and real, verifiable income, it isn’t likely they will reflate another housing bubble. That doesn’t mean some undervalued markets don’t have room to go up though.
The real barrier right now is credit qualification. So few people have good credit due to all the foreclosures that any increase in prices will be totally due to restricting supply.
They are certainly verifying income. In our Wells Fargo refi closing soon, the underwriters wanted explanations for the increases in income for both of us for each of the last three years. There weren’t any huge movements and there weren’t any sizable bonuses (non-wage income). Apparently, they just want to document the reasons for the changes…
I had to write a letter to Wells explaining why I spent $5,500 on a new HVAC unit.
Lenders should have been doing income verification all along. The foundation of lending is capacity to repay the loan. The buybacks banks are losing money on today largely have to do with income verification. If that documentation is not solid, the lender will eat any losses associated with that origination — as they should. The threat of loan buybacks is the main thing keeping lending standards tight, and it’s also what’s preventing large future taxpayer losses.
So if Baby Boomers will downsize, and first time homebuyers can only afford smaller housing options, does that forebode a mini-recession in larger single family houses?
It could. Although if everyone wants starter homes and nobody wants McMansions, then people will substitute up to larger homes.
In a normal market, real estate prices on a $/SF basis are higher on smaller units because much of the added square footage is inexpensive space. Over the last six years, this has been turned upside down and McMansions are selling for more than starter homes on a $/SF basis. I think that will go back to it’s historic relationship where starter homes are priced higher on a $/SF basis than McMansions. It will be a microcosm of the rest of the market were move-up markets slowly decline while first-time homebuyer markets bottom and show strength.
I’m not buying the theory that Boomers will be downsizing en masse. Sure, some will, but many Boomers have their self-worths and egos tied to the size of their current homes. Modeling their behavior on previous generations is folly, or perhaps wishful thinking.
They just need to step up the money printing and subsidies. Ludicrous Speed, to reference spaceballs.
Shiller will be right in real terms.
Case will be right in nominal terms.
And if the bond vigilantes roar, the fed will double down and monetize everything in sight; at that point NAR will be right in nominal terms because our past/current/future inflation will become blatantly obvious in rising prices.
A sad but accurate description of what’s to come.
This is the VERY extremely long housing bet….on the future of home prices
Baby bust continues: US births down for 4th year
Oct 3, 12:13 AM (ET) By MIKE STOBBE
NEW YORK (AP) – U.S. births fell for the fourth year in a row, the government reported Wednesday, with experts calling it more proof that the weak economy has continued to dampen enthusiasm for having children.
But there may be a silver lining: The decline in 2011 was just 1 percent – not as sharp a fall-off as the 2 to 3 percent drop seen in other recent years.
“It may be that the effect of the recession is slowly coming to an end,” said Carl Haub, a senior demographer with the Population Reference Bureau, a Washington, D.C.-based research organization.
Most striking in the new report were steep declines in Hispanic birth rates and a new low in teen births. Hispanics have been disproportionately affected by the flagging economy, experts say, and teen birth rates have been falling for 20 years.
Falling births is a relatively new phenomenon in this country. Births had been on the rise since the late 1990s and hit an all-time high of more than 4.3 million in 2007.
But fewer than 4 million births were counted last year – the lowest number since 1998.
Among the people who study this sort of thing, the flagging economy has been seen as the primary explanation. The theory is that many women or couples who are out of work, underemployed or have other money problems feel they can’t afford to start a family or add to it.
The economy officially was in a recession from December 2007 until June 2009. But well into 2011, polls show most Americans remained gloomy, citing anemic hiring, a depressed housing market and other factors.
The report by the Centers for Disease Control and Prevention is a first glimpse at 2011 birth certificate data from state health departments. More analysis comes later but officials don’t expect the numbers to change much.
Early data for 2012 is not yet available, and it’s too soon to guess whether the birth decline will change, said the CDC’s Stephanie Ventura, one of the study’s authors.
Highlights of the report include:
_The birth rate for single women fell for the third straight year, dropping by 3 percent from 2010 to 2011. The birth rate for married women, however, rose 1 percent. In most cases, married women are older and more financially secure.
_The birth rate for Hispanic women dropped a whopping 6 percent. But it declined only 2 percent for black women, stayed the same for whites and actually rose a bit for Asian-American and Pacific Islanders.
_Birth rates fell again for women in their early 20s, down 5 percent from 2010 – the lowest mark for women in that age group since 1940, when comprehensive national birth records were first compiled. For women in their late 20s, birth rates fell 1 percent.
_But birth rates held steady for women in their early 30s, and rose for moms ages 35 and older. Experts say that’s not surprising: Older women generally have better jobs or financial security, and are more sensitive to the ticking away of their biological clocks.
_Birth rates for teen moms have been falling since 1991 and hit another historic low. The number of teen births last year – about 330,000 – was the fewest in one year since 1946. The teen birth rate fell 8 percent, and at 31 per 1,000 girls ages 15 through 19 was the lowest recorded in more than seven decades.
If you look at the real home prices chart again and reset your expectations to the post-WWII mean, you’ll see we have less than 10% to fall before reaching the average. People always seem to forget that inflation can also bring the index down, so even if nominal home prices remain flat, two years of inflation puts us at the long term post-WWII average.
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