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Why havent lower interest rates spurred home-buying?
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One of the mysteries surrounding the post-financial crisis economy is why lower interest rates - led primarily by the Federal Reserve setting its benchmark rate to near-zero levels in 2008 - did not do more to spur home-buying, and overall credit expansion.

When the Fed originally slashed interest rates to its historically low levels when the program was announced on Nov. 25, 2008, the Fed promised it would "reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally."

But did it? Take existing home sales reported by the National Association of Realtors, which registered 5.26 million in 2015. About the same as the 5.18 million sales that occurred - in 2000.

Since 2000, the 30-year mortgage rate has dropped from 8.06 percent to 3.85 percent in 2015, its second-lowest level on record.

Yet, home sales are virtually the same. So, what gives?
Perhaps, the interest rate has little bearing on what compels individuals to purchase a home. Maybe factors like marriage and child-rearing in particular are more important.

But to the point, perhaps the problem is there is simply a smaller universe of potential homebuyers than there was 15 years ago.

According to the National Association of Realtors, the median home-buying age is 39 years old. And looking at statistics published by the Bureau of Labor Statistics, the population of individuals 35 to 39 year olds has actually decreased - from 22 million in 2000 to 19.8 million in 2015.

The number of people aged 35 to 39 with jobs too has dropped, from 18 million to 15.5 million.

In short, there are no new people on a net basis to go buy homes.

Perhaps that is why the housing bubble eventually popped in the mid-2000s. Fewer people to purchase homes at the obscenely high prices they were fetching in a high-risk game of musical chairs.

And today, leads lenders to keep pushing interest rates lower and lower to, if nothing else, fuel a market for mortgage refinances, one of the few apparent bright spots in the lower-interest rate environment, according to the Mortgage Bankers Association.

And it might also tell us something about the weak economic recovery post-2008. Recoveries are typically led by housing. But this time, there was not an expanding pool of potential homebuyers to help fuel it.

Sure, home values have recovered a lot of what they lost in the housing bubble. And home sales are up from their lows of 2008 and 2010. But it had nothing to do with collapsing interest rates. Those appear to operate independently. Rather it appears to have to do with a slight recovery in the 35 to 39 year old population, which bottomed at 19 million in 2011 to 19.8 million in 2015.

Going forward, the good news could be that the pool of potential homebuyers will keep expanding, if the U.S. Census Bureau's population projections are to be believed. The population of 35 to 39 year olds will increase back to 22 million in 2020 - the same as its year 2000 level. It will expand to 23.6 million by 2025, 24.9 million by 2030, and so forth until 2050, when it will reach 25.5 million.

Between, 2015 and 2050, that suggests about 0.82 percent average annual growth of that population.

This, of course, tells us nothing about how many of them will have jobs.

Still, it is worth comparing that with this demographic's performance of the past 50 years, when it doubled from 11 million in 1967 to 22 million by 2000 at 2.9 percent average annual growth. That led a dramatic expansion in housing in the United States during the 20th Century, simply because there was a need for new homes to be built.

The implication therefore is that there will be fewer new families to house in the coming decades. That will mean less new homebuilding. Fewer new jobs. Less growth in the housing sector for new units to sell. And yet, a slow but steady rise in demand.

Generally speaking there will be a market for housing so long as there remains a pool of people with incomes able to buy them. The unknown factor is job creation, which has not been keeping up with the population growth. Something to keep an eye on going forward.

Robert Romano is the senior editor of Americans for Limited Government.