Tag Archives: Capital Economics

As household formation mends and grows, the housing recovery will benefit overall, but the rental industry is expected to come out as the biggest winner, according to a report from Capital Economics. ""[W]ith the overwhelming majority of newly forming households over the next few years set to rent rather than own their home, the rental sector will be the disproportionate beneficiary,"" wrote economist Paul Diggle in the report. The analytics firm expects household formation to soon meet or exceed the rate of 1.1 million per year.

Strong positive indicators in the housing market have Capital Economics revising its predictions on growth in 2013 and beyond. According to the firm's most recent US Housing Market Analyst report, Capital Economics foresees ""further strong gains in home sales and housing starts in 2013,"" as well as improvements in prices and mortgage activity. According to the report, ""[t]he improvement in sales will continue to owe a good deal to investors and cash buyers, who are attracted to housing by the sheer extent to which it is undervalued and the prospects for strong rental market demand.""

Despite a number of potentially damaging headwinds, the ongoing housing recovery will remain sustainable for the foreseeable future, analysts for Capital Economics say in a recently released report. The housing industry's rapid rebound took many experts by surprise--even the researchers who authored the report admit they ""have been slightly taken aback"" by the recovery's speed. However, they point to several major indicators that show the current upturn is more than a temporary blip or a false recovery.

While almost one-quarter of homeowners remain underwater, rising home prices over the past year have some economists hopeful negative equity could begin to diminish in coming months. Negative equity is still crippling many homeowners and the wider economy, Capital Economics stated in a report. But, if home prices continue to rise, the global research firm sees the potential for 3.5 million homeowners to move out of negative equity positions over the next 12 months.

Friday morning's jobs report contained some good news with the bad, but analysts doubt there's enough strength in either direction to influence the upcoming presidential election. The Bureau of Labor Statistics reported the unemployment rate rose slightly to 7.9 percent in October from 7.8 percent in September. Even though the rate increased, the upward movement was due to a rise in entrants into the labor market, not a decrease in jobs. In a response from Capital Economics, economist Paul Ashworth wrote, ""Overall, this report is sure to be spun politically by both sides."" Economist Nigel Gault at IHS Global Insight said, ""Politically there was something for both presidential candidates to grab onto.""

A steady drop in distressed home sales may spell a better future for builders, Capital Economics analyst and property economist Paul Diggle says. In a US Housing Market Update released by the firm, Diggle notes that while a substantial overhang of properties still in the shadow inventory will keep distressed sellers in the market, the peak in distressed supply appears to be well behind us, giving homebuilders more room to grow with less competition from discounted existing homes.

While Barack Obama and Mitt Romney may have been ""frustratingly light on detail"" so far with regards to housing, an analysis by Capital Economics reveals the two candidates' policies may have more in common than they care to admit. In a Housing Market Update released by the company, property economist Paul Diggle writes that, based on the information Capital Economics has pieced together, ""it looks like anyone expecting either candidates' housing plan to make a dramatic difference to the course of the housing recovery will be disappointed.""

No doubt, the potential of the REO to rental market has caught the attention of both individual and institutional investors. But, what is the real potential of the rental market, and how long will it continue? In a recent report authored by economist Paul Diggle, Capital Economics addressed those questions. With distressed inventory shrinking and prices rising, the research firm expects the acquisition of single-family homes to end after a few more years.

When he ran for the presidency in 1980, Ronald Reagan, then Republican governor of California, struck at then-President Jimmy Carter over the strength of the economy. His question for Americans: Are you better off now than you were four years ago? That's the question Paul Ashworth and Paul Dales, senior analysts with Capital Economics, offered to answer in a report released by the consultancy on Friday. The report breaks down recent economic trends, including GDP, home sales, and median income.

When including distressed sales, CoreLogic reported a 2.5 percent yearly increase in home prices in June, and a 1.3 percent increase month-over-month from May. The rise in home prices is the fourth consecutive increase on a yearly and monthly basis, and CoreLogic's Pending HPI is forecasting at least a 0.4 percent monthly increase in July. In response to CoreLogic's report, Capital Economics said that while the gain in June is strong, ""the latest rise was marginally weaker than we would expect in a typical June, meaning that seasonally-adjusted house prices actually eased a touch.""