Markets & Economy

Will 2015 be the year ‘normal’ returns?

Patrick Stone: Household formation gradually taking care of oversupply problem

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As the housing industry makes a slow climb back to pre-boom character, household formation trends, rising home values and low interest rates make 2015 a candidate for the year "normal" will happen, according to Patrick Stone, president and CEO of the title and real estate services firm Williston Financial Group. In the boom period from 2001 to 2006, Stone said, housing vacancy in the U.S. rocketed up to 2.9 percent from a historical equilibrium of 1.7 percent as builders put up 2.3 million more homes (single-family homes and multifamily units) than households were created. That oversupply led to falling home prices, a great slowdown in new-home construction and a bunch of underwater homeowners, he said. Patrick Stone In the last five years, household formation outpaced housing construction by 1.1 million, Stone said, but housing, now at 2.1 percent vacancy in the U.S., won't reach a supply-and-demand "equilibrium," given current trends, for two or three more years. "I d...