September 13, 2011
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- Bu səhifədəki naviqasiya:
- Quarterly Vacancy Rate, 1990-2010
- Median Existing Home Sale Price to Median Asking Rent
Introduction
- 12 - Historical Homeownership Rate, 1965-2011 60%
61% 62%
63% 64%
65% 66%
67% 68%
69% 70%
1Q 19 65 1Q 19
70 1Q
19 75 1Q 19 80 1Q 19 85 1Q 19 90 1Q 19 95 1Q 20 00 1Q 20 05 1Q 20 10
Source: Current Population Survey/Housing Vacancy Survey, Series H-111 Reports, Bureau of the Census
The corollary to increased rental preference is that, as the rental market heats up, homeownership becomes an increasingly affordable alternative on a relative basis. The recent trend toward renting has eaten into supply, with rental vacancy rates declining from a pre-recession peak near 14% to 9.2% in 2Q 2011, the lowest level observed since 2002 according to the U.S. Census Bureau. Data from 82 markets collected by Reis Services suggests a similarly rapid decline, with the measured apartment vacancy rate at 6.0% in the second quarter versus 7.8% a year ago. 2 At the same time, the weak economic environment has kept new apartment supply at depressed levels. According to Reis, approximately 8,700 new apartment units opened during the second quarter—the second lowest total since Reis began tracking the data in 1999. Quarterly Vacancy Rate, 1990-2010 6.0%
7.0% 8.0%
9.0% 10.0%
11.0% 1Q 1990 1Q 1992
1Q 1994
1Q 1996
1Q 1998
1Q 2000
1Q 2002
1Q 2004
1Q 2006
1Q 2008
1Q 2010
Source: U.S. Bureau of the Census
These supply/demand dynamics have begun to translate into higher rental prices. Moody’s Analytics estimates national average rents increased by approximately 3% in 2010. Reis also reported that average effective rents across its covered markets increased 2.4% year-over-year in the second quarter. Data from the U.S. Census is more mixed, with median asking rent for vacant units down 1.4% YoY in the second quarter. However, we would note that second quarter numbers still represent a 9.4% increase from 5 years earlier. Viewed in combination with
2 http://online.wsj.com/article/SB10001424052702304793504576430201720587490.html Introduction
- 13 - the concurrent decline in housing prices and historically low interest rates, buying a home looks increasingly compelling versus renting. By our calculations, the national average price-to-rental ratio has declined from greater than 25x in 2007 to approximately 17x, roughly in line with historical average levels.
10.0x
12.5x 15.0x
17.5x 20.0x
22.5x 25.0x
19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 Source: U.S. Bureau of the Census Fundamentals Imply Attractive Housing Market for Long-Term Investors Of course, we may still be years away from a full recovery in the U.S. residential real estate market. Housing supply/demand imbalances (detailed further on pages above) have not yet been fully resolved. Apartment vacancy rates are still above longer-term historical levels, and conversion of excess single family home inventory into rental homes could also increase supply. An improved labor market, regulatory clarity regarding the home mortgage lending system, and the return of a healthy private mortgage lending business are also needed to support a sustained housing recovery. However, home affordability has reached unprecedented levels. Only 23% of single- home renters and 29% of multifamily home renters say renting makes more sense than buying, according to the latest Fannie Mae household survey. Precisely predicting the timing of this recovery is probably futile, but as long- term, fundamentally driven value investors we believe the current housing market fundamentals suggest this is an attractive point to make a long-term play on a recovery in the housing market. Consumer Confidence May Be Bottoming Broadly negative consumer sentiment continues to act as a major headwind to a housing recovery despite the improving fundamentals. Consumer sentiment has deteriorated in recent months amid the signs of a slowing economic recovery and increased concerns over a double-dip recession. The recent re-emergence of extreme volatility in the financial markets and further flaring up of the European sovereign debt crisis have also spooked individual investors. Reflecting these concerns, the Reuters/University of Michigan Consumer Sentiment Index plummeted to 55.7 in August—an extreme low previously breached only by November 2008’s 55.3 reading and two sub-55 months in the spring of 1980. The expectations index was even more dreadful in August, coming in at 47.4. We recognize that the aforementioned concerns are very real and significant downside risk to the macro economy remains. However, consumer sentiment is typically a lagging, backward-looking indicator and in our view much of this risk is already reflected in current consumer (and market) sentiment. Should these risks ease, healthier consumer sentiment may provide the spark to homeownership demand necessary to ignite a housing recovery given the increasingly attractive underlying affordability fundamentals. Yüklə 4,37 Mb. Dostları ilə paylaş:
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