Suppressed homeowners will create demand for new housing this year, which will lead to increases in both home prices and rental rates, a national economist predicts.
Cramped, multigenerational households are breaking up and first-time buyers are house-hunting, Lawrence Yun, chief economist and senior vice president of research at the National Association of Realtors, said Friday at the Tucson chapter's forecast seminar.
"The household formation was suppressed for five years," he said. "This is going to raise housing demands."
Tucson-area Realtors say the trend has already helped drive up local home prices.
The median sales price has climbed nearly 23 percent since December 2011 from $120,000 to $147,500 last month, data from the Tucson Association of Realtors Multiple Listing Service shows.
The year closed out with average home prices of $183,539 in December - up from $161,471 in December 2011.
Average days on market during the last month of the year was 55 after 2012 started out at a high of 80 days on the market.
Given Tucson's proximity to Phoenix, where home prices are appreciating by 20 to 30 percent, local home prices could jump 10 to 15 percent this year, Yun said.
He said new home construction is picking up, but tight lending practices have prevented smaller home builders from being able to start projects.
As adult children move out of their parents' homes, some will turn to rentals while the housing supply catches up, leading to increases in rents, Yun said.
This may also be the year that mortgage rates start to climb, he said, likely by 1 to 1.5 percent.
By 2015, Yun said, inflation could rise to as high as 6 percent.
Although he does not believe the U.S. will slip into another recession, Yun noted that the economy is growing at "close to zero" and called the housing market's recovery "the one bright spot."
Contact reporter Gabriela Rico at firstname.lastname@example.org or 573-4232.