Housing in One Graphic
John Burns Real Estate
By John Burns
May 3, 2012
The following graphic summarizes the U.S. housing market. The red boxes are a small percentage of the total, yet are receiving all the media and political attention.
Let's not forget the overwhelming positives:
- 22% of American households own their home free and clear of any mortgage
- 34% of American households own their home and have equity in it
- 34% of American households rent
That totals 90% of American households.
Of the 40.6 million who rent,
- 42% rent in a small apartment building
- 27% rent a single family home
- 20% rent in a large apartment building
- 6% rent a condo
- 5% rent a mobile home, boat, etc.
So I have a few questions:
- Why are some of our leaders asking 90% of Americans to bail out the 10% who have no equity in their home?
- What happens when the 1.5 million excess vacant homes are filled, which is already occurring in many neighborhoods across the country?
- Why is the apartment REIT market so popular with institutional investors, when it is less than 20% of rental units?
- What happens when the family renting a home for $1100/month cleans up their credit and buys the same home with a mortgage payment of $800?
Americans make astute financial decisions, at least in the short-term (our addiction to debt will hurt us in the long-term). We will bailout very few homeowners. We will increase construction by building in the ever-increasing number of areas that need homes and builders can make a profit. We will figure out how to make portfolio investments in the massive single-family rental market. We will buy homes if it makes financial sense for us to do so.
I am reminded of a famous Winston Churchill quote: "You can always count on Americans to do the right thing - after they've tried everything else." The excesses from the housing bubble are gradually clearing.
P.S. Special thanks to SVP Wayne Yamano for putting this graphic together.
(c) John Burns Real Estate
