The Housing Market, Essay Example

The housing market plays a crucial role in the economy. This is done with the help of a real estate market and the houses are sold and purchased either directly between individuals or indirectly with the help of real estate brokers. The basic concept of forex traders plays a role frequently and pays close attention to the housing market. In the country where there is a buoyant in the housing prices, it have a tendency to increase consumer spending. These are imperative factors of a strong economy. The ownership of house is also known as owner occupancy is the most famous type of real estate investment in the United States. Nearly two-thirds of residents have ownership of their homes as reported by the National Multifamily Housing Council. Individuals who are in the housing market place to purchase a home to live in often need to borrow money in the form of a housing mortgage since home prices are commonly well above the finances of young people beginning a household. The aim of this paper is to follow the People boxes Inc. objectives which is a consortium of real estate owners that seek the elements that drive the demand in real estate. The paper will analyze the key factors that play a role in demographics and purchase of real estate with the help of Statistics analysis. These factors are dependent on the house hold income. So, the factors of demographics that will be considered for analysis are youth, retired citizens, age, education level, rental occupants and a combination of all these factors to reach a conclusion.

Rental Property

In the rental property market we can see that income varies easily and that is the reason why people choose to rent instead of purchasing. As the mortgage will only plan to stay there temporarily which shows that the people may not have the capital yet to fully commit to mortgage. Many advantages have been provided by the rental property and comprises of a wide variety of choices for people’s home throughout their stages of life. The recent economic turbulence highlighted the many benefits of renting and raised the barriers to homeownership, igniting a surge in demand that has buoyed rental markets across the country. However, substantial erosion in renter incomes has pushed the number of households paying excessive shares of income for housing to record levels. Assistance efforts have failed to keep up with this expanding need, undermining the nation’s long standing objective of ensuring decent and affordable housing for everyone. Contrary to the long uptrend in homeownership, American households have progressively turned to the rental market for their living. Factors to consider are household income, renter occupied housing, and housing stock per capita.

Model “A” governs that household income is dependent on the percentage of the total housing stock that is renter occupied while model “B” governs that household income is dependent on the percentage of the housing stock that is renter occupied as well as the housing stock per capita. Model “B” is definitely more accurate than model “A”, making model “B” the better choice. This is because model “B” takes into consideration the housing stock per capita factor and this factor added on to the single percentage factor in model “A” provides a more solid outcome when determining what household income is actually dependent on. Where model “A” gives a more broad or general outcome regarding what factors that household income is dependent on, module “B” gives a specific outcome with the housing stock per capita factor, further specifying the general conclusions of model “A”.

Every variable is significant in determining what factors household income is dependent on. However, in regards to rental property, the most significant variable is the percentage of homes that are renter occupied. This shows when this variable is present in all of the rental property models A, B, and C. The housing stock that is renter occupied contributes to both household income and the housing stock per capita. All factors appear to be dependent on this one variable.

My interpretation of these models is that levels of income do in fact vary with rental housing, given the variable of renter occupied housing. Rental occupied housing however, may be impairing the housing market. Rental vacancy rates declined to 7 percent in the last quarter of 2014. This was the lowest percentage of rental vacancies in 21 years, based on a report from the Census Bureau. Monthly rental payments on such vacancies, on the other hand, have increased, generating more rental income and cutting into savings that might have otherwise gone towards actually purchasing or financing a home. Median listed prices of rent in the US inflated to about 9 percent between 2011 and 2013, as reported by the Census Bureau. Median asking prices on home sales, in turn, increased by less than 2.5 percent over the same period.

Considering the residual plots, there does not seem to be any problems with regressions other than what metropolitan statistical areas (MSA) People Boxes, Inc. is analyzing. A general statistical gathering of data from multiple MSA’s might provide inaccurate outcomes depending on who is reading them as income levels as well as the factors that drive them in the housing market vary among the spectrum of MSA’s. For better accuracy, People Boxes, Inc. may want to consider these variations among MSA’s.

Analysis of the Data

By looking at the data in the excel sheet we can see the cities which are rental income and which are not. The data set comprises of 280 cities with two variables. One is the Total Households and the other is the number of units rented. We can see that the minimum units are 23,220 whereas the maximum are 7,738,759. The units rented are minimum 20,987 whereas the maximum unites rented out are 6,716,032. The data is analyzed using SPSS software which shows the descriptive statistics, the comparison of means using ANOVA, One sample t test etc. From the one sample t test we can say that at 95% confidence interval the values are to be accepted for both the upper and lower values. The lower value is 22,2434 whereas the upper values of the total household is 387,711.Teh unites lying in between 196,370 and 343,384 are to be accepted for rent.

In keeping with the large share of renter occupied housing of modest income, rental housing is emphasized in rather low-income communities. The recovery of rental housing is widespread, with lesser vacancies, higher rents, as well as increased levels of construction evident in a large majority of markets. Indeed, multi-family permitting has progressed in two-thirds of the 100 largest metropolitan areas, exceeded medians during the past decade in a third of those markets, and even surpassed earlier peaks in a few metros. The accelerated expansion of housing production has raised concern about potential over-building, particularly since long periods of development may mask the total volume of new multi-family housing coming on the housing market. So far, however, there are no signals of significant increases in vacancies or decreases in rents that might indicate an oversupply of housing units. Still, vacancy rates do appear to be declining out while rent increases are slowing in many markets. This might be suggesting that supply and demand in the rental market are adjusting into balance. One component of the rental market that does require attention, however, is multi-family financing.

The fall of the housing market was a key component in the economics of the Great Recession of 2008, and its slow revival is one of the major impediments to the general economic recovery. Even so, the renter occupied sector bounced back substantially quickly both because demand has been increasingly strong and because it was less caught up in the lending excesses that drove the housing market. Through an array of measures, the renter occupied sector has been progressing for several years.