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

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 don’t think new-home construction will catch up to household formation before then,” Stone said.

In the last 12 months, Stone said, equity in U.S. homes rose $2 trillion, to $9.1 trillion, which still falls short of 2007’s equity level of $10 trillion. Rising home values will continue to bring more homes on the market, he said.

As housing approaches equilibrium, Stone doesn’t see housing demand being hampered by high mortgage rates in the next 12 to 18 months. He’s anticipating that 30-year, fixed-rate mortgage rates will remain under 5 percent during that period.

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