The Harvard Joint Center for Housing Studies released its 2007 State of the Nation's Housing report earlier today, the 19th year this report has been put out. Be sure to check out the newly-launched video channel here at HW for an interview with study contributor Moises Loza on Bloomberg TV earlier today. The press release put out by Harvard sums up the gist of the report nicely:
In the latter half of 2006, the drop in home building was so drastic that it shaved more than a full percentage point off national economic growth. Though builders cut back on housing starts, the numbers of vacant homes for sale rose by more than 500,000 from the fourth quarter of 2005 to the fourth quarter of 2006 and continued to rise in the first quarter of 2007. Meanwhile, the tightening of credit standards in the wake of worse than anticipated subprime loan performance is further dampening demand. It is unclear how the wave of subprime loans with steep initial discounts that originated at much lower interest rates will perform when the discounts expire and the loans reset to higher interest rates. Already, homes entering foreclosure increased by about 75,000 from the fourth quarter of 2005 to the fourth quarter of 2006. Until some of the excess inventory is absorbed by the demand cycle and credit conditions stabilize, housing will continue to struggle and home prices will fall in more areas.
For those looking for the full report, click here. Calculated Risk, as usual, has a good take on the major media coverage of this report, including this MarketWatch story. All in all, however, I'd say this report offers few surprises. It's mostly what anyone in the mortgage business already knew -- there is more pain ahead, but things will improve eventually. If there was any surprise, it was in some of the statistics the study provided -- by 2005, 17 million households in the U.S. were spending more than 50 percent of their income on housing? Anyone else surprised by that number?