Tag Archives: ACS

CR: Lawler: How Much Has the Single Family Housing Market Shifted to Rentals (in numbers)?

Lawler: How Much Has the Single Family Housing Market Shifted to Rentals (in numbers)?

by Bill McBride on 4/24/2013

From economist Tom Lawler:

While good, reliable, consistent, and timely government data on the housing stock and housing tenure do not exist, the limited data available suggest that over the last few years (1) there has been a sizable increase in the number of SF housing units occupied by renters; (2) a decent-sized decline in the number of SF housing units occupied by owners; and (3) this trend began several years ago, and several years before widely-publicized “institutional” investor buying emerged.

Estimates of the SHARE of SF housing units occupied by owners vs. renters are available from the American Community Survey annually from 2006 through 2011 and biennially from the American Housing Survey through 2011, and “imprecise” estimates of the owner vs. renter share of “one-unit” structures can be derived from the detailed tables of the Housing Vacancy Survey through 2012 – though rental and homeowner vacancy rates for “one-unit” structures in the HVS include not just SF detached and attached homes but also manufactured/mobile homes. All three surveys show a substantial increase in the share of SF/one-units occupied homes occupied by renters from 2007 to 2011, and the HVS data show a continued share increase in 2012. Both the AHS and the HVS, however, appear to overstated significantly overall homeownership rates (based on a comparison to decennial Census results), while the ACS homeownership rates seem more consistent with decennial Census data. As such, I believe the ACS data on the renter share of the SF housing market is superior to the AHS and HVS data.

Rental Share Single Family Housing Market Click on graph for larger image.

Note: The estimate for 2012 is based on the 2012 vs. 2011 change in the HVS estimate of the renter share of occupied “one-unit” structures.

Translating the ACS share data to numbers, however, requires a little work. First, the numbers for households in the annual ACS results are “benchmarked” to the latest available housing stock estimate for that year, and there have been significant upward revisions in housing stock estimates. Second, the latest available “official” housing stock estimates do not incorporate post-Census analyses of the estimated “undercount” of housing units in the “official” Census numbers. And finally, the ACS appears to overstate the overall housing vacancy rate, though by less than the HVS or AHS. Unfortunately, adjusted for this last factor is difficult, since the degree of the vacancy rate “overstatement” is only available for 2010. As such, I only adjusted the ACS estimates for more reasonable estimates of the housing stock (incorporating the Census 2000 HUCS and the Census 2010 CCM).

Making this adjustment, and using estimates for the 2012 ACS data based on HVS results, it would appear that from 2007 to 2012 the number of SF detached and attached homes that were occupied by renters increased by about 2.6 million, while the number of SF detached and attached homes that were occupied by owners declined by about 1.3 million. The largest increase in both the number and the share of renter-occupied SF homes appears to have been in 2009.

Since “active” investor buying of SF homes that were then rented out has been going on for many years, why has the media only recently begun to focus intently on this “trend? First, investor buying in earlier years occurred when for-sale inventories (and REO inventories) and the pace of foreclosure were high, the economy in general and labor markets in particular were extremely weak, and there were no signs either of a housing “recovery” or improving home prices. Second, last year a number of large institutional firms very publicly announced plans to ramp up purchases of SF homes as rental properties. Third, their ramped-up buying came when overall inventories of existing home for sale, and especially “distressed”/REO properties for sale, had fallen sharply, as well as when an improved economy and record-low mortgage rates were producing a modest increase in potential demand from folks wanting to buy a home to live in. (Folks love anecdotal stories about how investors are “out-bidding” or “crowding out” first-time home buyers!)

And finally, their (and other) aggressive buying in the face of sharply lower inventories (large institutional investors appear to have lower “hurdle rates” than “traditional” investors) has helped fuel a significant recovery in home prices in many parts of the country (oh my, more “de-stickification!”)

All-Cash Share of Home Sales (Yearly Totals)
Phoenix Tucson California* Florida SF Florida C/TH Knoxville Omaha
2007 11.6% 12.6% 10.3% N/A N/A 12.4% N/A
2008 12.6% 18.8% 18.7% 25.5% 43.6% 15.2% 12.1%
2009 37.2% 23.9% 26.3% 36.8% 64.0% 17.8% 11.8%
2010 41.8% 28.3% 28.0% 42.3% 73.2% 22.1% 16.7%
2011 46.9% 34.6% 30.4% 45.5% 76.6% 24.5% 20.2%
2012 46.0% 34.4% 32.6% 45.7% 75.6% 26.6% 17.6%
*Derived from Dataquick chart; new and resale homes based on property records, all others MLS based.

In 2010 there were 141,722 MLS-based home sales (SF and C/TH) in Florida that were all-cash transactions, while there were 79,779 foreclosure sales and 53,780 short sales. In 2012 there were 54,607 foreclosure sales and 63,250 short sales (or 117,867 “distressed” sales, down 15,692 from 2010), but all-cash transactions increased by 28,647 to 170,369.

From 2009 to 2012 MLS-based home sales in Florida increased by 24.2%. All-cash transactions increased by 54.1%, while mortgage-financed transactions were very slightly LOWER in 2012 compared to 2009.

Read more at http://www.calculatedriskblog.com/2013/04/lawler-how-much-has-single-family.html#eoU14525vQZTblwA.99

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JCHS: Different Data Sources Tell Different Stories About Declining Geographic Mobility

Different Data Sources Tell Different Stories About Declining Geographic Mobility

The Census Bureau recently released its usual extensive Current Population Survey (CPS)-based package of tables on geographic mobility for 2011-12.  A new feature of this release is a series of historical charts, one of which is reproduced below. Examining just the last decade, mobility rates took a sharp turn downward in 2007-08, with most of the decline occurring in moves between states (Figure 1).  This sharp decline has been the impetus for many stories about the decline in the geographic mobility rate and its implications for housing (see this example).  Most have assumed that the mobility decline was caused by the Great Recession: with reduced job opportunities across the country, there was less inducement to change residence in search of employment, particularly among young adults who were unable to leave the parental nest. Some have asserted that the loss in housing values and tight mortgage lending have “locked in” owners who otherwise would like to move, especially those owners who are now under water on their mortgages.Figure 1

Source: U.S. Census Bureau, Current Population Survey, 1948-2012, select years.

Yet some recent efforts to scrutinize mobility rate trends and associations have raised doubts about the basic facts. Research at the Minneapolis Fed suggests Interstate Migration Has Fallen Less Than You Think.  Another series of papers have debated the strength of the association between negative equity and reduced mobility. Findings published in 2010 that owners with negative equity are one-third less mobile were challenged as largely a result of the authors dropping some negative-equity homeowners’ moves from the data.   The challenge received a rebuttal that was lukewarm at best.

But a more fundamental question is whether there was indeed as sharp a decline in mobility in the late 2000s as the CPS data in Figure 1 suggests. Since 2006 the Census Bureau’s American Community Survey (ACS) has also provided annual estimates of mobility rates that are consistently higher than those of the CPS and suggest a different trend (Figure 2). One factor contributing to higher ACS rates could be that, starting in 2006, the ACS included in its sample the more mobile institutional population. In contrast, the CPS sample excludes most people that live in group settings such as correctional facilities, military barracks, and college dormitories.  The Census Bureau has recalculated the ACS mobility rate based only on the population living in households for 2006 through 2009.  These modified ACS rates plotted in Figure 2 are significantly lower than those with the group quarters population included, are in line with the long-term more gradual decline in the pre-2000 CPS trend, and definitely do not show as sharp a decline around 2007.

Figure 2

Source: Current Population Survey (CPS) and American Community Survey (ACS) published tables.  The Census Bureau has recalculated the ACS mobility rate based on population living in households for 2006 through 2009 (www.census.gov/prod/2011pubs/p20-565.pdf).  The ACS did not cover the entire U.S. until 2005.

The differences between the ACS and CPS mobility rates in Figure 2 are supported by additional analyses of inter-county and inter-state migration trends from these two sources. This research also shows that the ACS levels and trends are mirrored almost exactly by migration rates from IRS data, further adding credence to the ACS. Mobility rates of household heads calculated from the American Housing Survey (AHS) also closely follow the levels from both the ACS and the IRS data.  The persistently lower rates of mobility in the CPS since 2000 are not well understood, but might be explained by the CPS data being collected primarily by a telephone survey that might not fully reflect the recent growth of cell phone-only households – assuming that those households contain persons that are among the most mobile.  (The ACS is primarily a mail survey, IRS data are from filed tax returns, and the AHS follows the occupants of particular housing units over time.)

If there is a story in the ACS trend, aside from one of gradual decline over the long-term, it is that the period immediately leading up to the Great Recession was one of above-trend mobility.  More people were moving than might have been expected during the peak of the housing boom. IRS migration trends in the analysis cited above support this story as well.  The bursting of the housing bubble has mostly just returned geographic mobility rates to their long-term trend.  The long-term decline in mobility is likely due to a host of broad social, economic, and demographic trends: the aging of the population; delays in the transition to adulthood; the increase in dual-career households; the changing race/Hispanic origin of the population; more working from home; more homogenized employment opportunities across different locations; the increase in long-distance commuting patterns; etc.  Absent another housing boom, we should expect near-term mobility rates to continue to gradually decline.

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