| It is a safe bet that builders will be producing an average 2 million units a year – including manufactured homes — in the decade ahead, he indicated, compared to an average of 1.67 million in the past 10 years. Conventionally built single-family homes will account for about 70% of the housing supply produced in the next 10 years; multifamily units will have a 20% share of the market and the remaining 10% will be trailers, he said. A driving force behind the ongoing health of the housing industry will be strong household formations, which will be somewhere in the range of 1.32 million-1.63 million per year, Seiders said. But mortgage interest rates are unlikely to be a driving factor for the marketplace. Homeownership Heading Higher “The data tells us that housing is not going away as long as you have a strong economy and single-digit interest rates,” said David Lereah, chief economist for the National Association of Realtors®. The nation’s rate of homeownership, which now is in the 68% range, is headed to over 70% by the end of the next 10 years, and could even hit 71%-72%, Lereah predicted, as minority households start catching up with their non-Hispanic white counterparts. Healthy Price Appreciation Likely David Berson, chief economist for Fannie Mae, said that home prices probably won’t be advancing at the 8% clip seen in recent years, but they will follow trends in income growth, which should average 4%-6% in the 2004-2013 period. He said home price increases should average more at the upper end of that range. Conceding the possibility of more anemic home price appreciation, Berson noted that “the risks are stronger that gains will be higher because of communities across the country restricting the supply of homes.” Berson said that over the coming 10 years, “at some points, mortgage rates will be lower and at other times higher than expected." While that could have some impact on household decisions to rent or to own, it is unlikely to undermine the basic demand for housing emanating from the country’s strong population growth. The nation has also never before had the assortment of mortgage products that it has today to manage fluctuations in interest rates, said Paul Merski, chief economist for the Independent Community Bankers of America. Mortgage Debt to Double “America’s families will likely need 125 million mortgage loans for home purchase or refinance totaling $27 trillion in mortgage originations,” over the next 10 years, said Frank Nothaft, chief economist for Freddie Mac. “First-time buyers will remain a major component of the purchase market,” he added, buying about 24 million homes. By the end of 2013, that should put outstanding mortgage debt at $17 trillion, said Nothaft, more than double today’s $8 trillion. American Dream Alive and Well “The American dream of homeownership remains alive and well,” said Merski. “For current home owners and individuals and families seeking to buy a home, the economic benefits of homeownership will continue to rise in the years ahead.” The housing industry can expect the challenge of selling to a more diverse population in coming years, Merski predicted. At least 10 million additional households will become home owners by 2013, and roughly half of them will be minorities. | 
