Just when we were starting the party for the return of the Minneapolis duplex market, Freddie Mac called and asked us to turn down the music.
In fact, according to their November Housing Market Outlook, if trends continue along their current trajectory, we can celebrate a full recovery in 2017.
Yes, Freddie says, there were seven consecutive months of positive gains through August. Yes, home sales through the first nine months of the year were up 9 percent from last year and on pace for five million units but…
There’s those nagging issues of 7 percent unemployment and modest family income growth, which have put something of a damper on the formation of new households.
It seems the rate of household growth during the housing collapse of 2007-2011 ran at a paltry .5 percent per year. Between 1990 and 2006, that figure ran closer to an average of 1.2 percent. Over the last four quarters, we’ve seen that figure around 1 percent. Encouraging, but there’s still a lot of making up to do.
In its caution, Freddie is also taking into account demographic shifts among Generation Y and the Baby Boomers. It appears the former are living with mom and dad longer. Meanwhile, the Boomers are delaying buying retirement homes — because their kids are still living with them.
Freddie’s report did offer one reason to celebrate. They actually believe we will see house and duplex prices appreciate at a rate of about 3 percent a year.
Since that’s a whole lot better than declining values, I say, party on!