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Assessing the American Housing Market

There is light at the end of the tunnel for the U.S. housing market in 2011, finally. Unfortunately, we also believe there is still a long track ahead before housing can fully emerge into daylight once again. The good news is that the U.S. economy clearly appears to be on the mend, and job growth is resuming in many markets across the country. With that good news in mind, though, expectations should remain realistic since by our analysts’ calculations, the total distressed home inventory pipeline (consisting of 90+ day delinquent mortgages, homes actively in foreclosure, and bank-owned units) stands at approximately 5.1 million units (this equates to an estimated 2.8 million excess vacant housing units when compared to the 20-year average vacancy rate). Unfortunately, there are still roughly 12 million mortgages in a negative equity position in an economy that has hemorrhaged approximately 7.4 million jobs.

We also believe a critical generational demographic shift will soon alter the supply and demand dynamics of single-family housing in ways never seen in the post- World War II environment. Specifically, academic research studies have shown that in roughly two-thirds of all states, by the time homeowners hit the key retirement age of 65, on balance, older households begin to turn into net housing sellers rather than net home buyers. At first, this seems to occur as new retirees migrate toward warmer Sun Belt destinations and as more affluent households opt to consolidate homes, possibly converting a vacation home into the primary residence. Over time, this also gradually leads older households to sell their primary residences, possibly in favor of moving in with younger relatives or into senior housing facilities, such as independent or assisted living apartments. By age 75, even residents in popular retiree states like Florida, Arizona, and Nevada turn into net housing sellers.

Professional tax advice can add real value particularly when you are dealing with cross-border taxation issues. If you would like a referral to an a qualified Certified Public Accountant (CPA) or Estate & Tax Attorney who is experienced in U.S.-Canada taxation please feel free to contact me.

April M. Dorey, B.Comm, FMA, FCSI
T: 250.405.2429 or 1.877.405.2400
april.dorey@raymondjames.ca
www.aprildorey.com

 

*Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation. You should discuss any tax or legal matters with the appropriate professional. Written by April Dorey and expresses the opinions of the author and not necessarily those of Raymond James Ltd. Statistics and factual data and other information in this newsletter are from sources RJL believes to be reliable but their accuracy cannot be guaranteed. Securities-related products and services are offered through Raymond James Ltd., member CIPF. Financial planning and insurance products and services are offered through Raymond James Financial Planning Ltd., which is not a member CIPF. In accordance with privacy legislation, the individuals you are referring must consent to their information being provided to me.

© April Dorey. Articles, statistics and other data referred to or cited are intended to provide readers with potentially useful information for their own personal use. *Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation. You should discuss any tax or legal matters with the appropriate professional. Reproduction without permission is permitted with due acknowledgement. The views expressed are those of the author, April M. Dorey, and not necessarily those of Raymond James Ltd. It is provided as a general source of information only and should not be considered to be personal investment advice or a solicitation to buy or sell securities. Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor’s circumstances and risk tolerance before making any investment decision. The information contained in this article was obtained from sources believed to be reliable, however, we cannot represent that it is accurate or complete. Raymond James Ltd. is a member of the Canadian Investor Protection Fund.

For more information please contact:

April Dorey, B.Comm, FMA, FCSI
Financial Advisor
Raymond James
10th Floor, 1175 Douglas Street
Victoria, BC.
Tel. 250-405-2429
www.aprildorey.com

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