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54 | Th e M Rep o RT o r i g i nat i o n s e r v i c i n g a na ly t i c s s e c o n da r y M a r k e t local edition ANALYTICS study: Household Formations now at Pre-recession levels ReseaRcheRs find household foRmation geneRally RecoveRs fRom economic upheavals in about thRee yeaRs, RegaRdless of the employment situation. california // New house- hold formation in the United States has recovered from the widespread job losses that came with the recession, according to a new study from the Lusk Center for Real Estate at the University of Southern California. The study was conducted and authored by Gary Painter, director of the Lusk Center, and doctoral candidate Jung Hyun Choi, to determine how long declines in household formation would last following a major economic shock such as a drop in employment that occurred during the recession. The study found household formations consistently return to their previous levels in about three years, regardless of whether employment has recovered at the same rate during that time. "This shows us that even a permanent increase in the unemployment rate will not have a permanent impact on housing formation," Painter said. "As a result, policymakers and industry practitioners have a new level of predictability when it comes to how economic crises impact the rate of new households." The researchers found in their study that household formations in the United States fell to almost zero during the recession's peak years of 2008 to 2010, but then played three years of catch-up and have now recovered to pre-recession levels of about one million per year. Quarterly data from 1975 to 2011 showed house- hold recoveries typically lasted three years following periods of unemployment. "The freeze in formations is over, and people are again moving out and forming house- holds. This means that real estate professionals and policy makers should not keep waiting for pent- up demand," Painter said. "So while a number of factors will continue to influence the housing recovery, household formation is no longer one of them. Beige Book reports Mixed residential real estate conditions While home sales and home pRices expeRienced mixed movement acRoss the 12 fed distRicts, all distRicts RepoRted a positive Residential lending atmospheRe. washington, d.c. // Today, the Federal Reserve released its Beige Book for February 2015, which found residential real estate conditions were mixed among the 12 districts. Home sales increased in Boston; Philadelphia; Richmond, Virginia; St. Louis; Dallas; and San Francisco; but fell in Cleveland and Kansas City. Weather conditions slowed home construction in New York, Philadelphia, and Cleveland and caused Boston to have low levels of inventory. The report noted lack of desirable lots and low inventory levels continue to slow the market. Philadelphia, Boston, and New York all experienced relative growth. All six New England states experienced an increase in single-family home sales at the end of December 2014. In Massachusetts, December was only the second month of the past six with a year-over-year in- crease in home sales, while pric- es increased in 26 of the last 27 months. The New York District's housing markets strengthened somewhat in early 2015. Rents across the rest of the district are up roughly 2 percent over the past year. Housing markets across the rest of New York state and New Jersey have mostly been sluggish, in part due to the inclement weather. Although home sales are increasing rapidly in Philadelphia, growth is slower in the rest of the state. Residential real estate activ- ity increased moderately in the Richmond, Virginia district. Realtors in Virginia and North Carolina reported increased sales, especially for higher-end homes in North Carolina. Home sales increased in the St. Louis district on a year-over-year basis. Compared with the same period in 2013, December 2014 monthly home sales were up 5 percent in Louisville, Kentucky, 11 percent in Little Rock, Arkansas, and 29 percent in St. Louis. Home sales rose in Dallas, although reports on the pace of growth were mixed. Contacts in Dallas-Fort Worth noted a strong, earlier-than-normal pickup in traffic and sales, while demand in Houston held steady. Home prices continued to edge upward in this district. Home sales fell in Cleveland and Kansas City. Cleveland single-family home sales for all of 2014 were down slightly from last year, while the average sale price rose 4 percent. Kansas City resi- dential sales decreased modestly, in part due to seasonal sales pat- terns and low inventory. Sales of low- and medium-priced homes continued to outpace sales of higher-priced homes in the city. When measuring banking and finance, the report found residential lending was positive at all reporting banks, with bankers in Cleveland, Richmond, Chicago, and San Francisco reporting an increase in refinancing activity.

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