Can’t sell? Don’t split

Everyone and his uncle has made forecasts on when the US housing market is likely to revive,but what Deutsche Bank has done is to take it to a different level. Its research says that since selling the family home has become so much more difficult,couples are preferring to stay together. Divorce rates haven’t been lower since 1998.

Deutsche Bank projects a 5% decline in US prices,which would further depress household wealth and sentiments retarding expansion of consumer spending. Home-building accounts for a substantial part of the bounce in discretionary spending that propels the economy back to full employment during cyclical recoveries. The most important factor on the demand side is demographic trends. The research underlines that a number of factors have discouraged potential new homeowners. Apart from a lower divorce rate,population growth has declined by 0.2 million over the past couple of years. The economic downturn and depressed job market have reduced both legal and illegal migration affecting demand of new homes.

Foreclosures,the report projects,are likely to rise to more than 3 million this year and will remain high for at least the next year. These foreclosures will be adding to the net supply of houses and reduce the net demand for new homes to some extent. Although most families that have foreclosed will move out of the owner-occupied units into rental units,it is also likely that some families that have foreclosed will move in with family and friends,which will in turn affect demand for new homes for another year.