Is the shine beginning to fade on the current housing market?  On first blush, it appears that real estate continues to be on an upward trajectory, with a recent report by the National Association of Realtors seeing a 5.5 percent jump in contracts to buy existing homes in February, the largest jump in nearly seven years.

But like an onion, of you peel the layers back, you might start to see a different story.

Fueling the housing bubble in the early 2000s were a number of drivers – primarily subprime loans and loose lending practices, including inflated valuations. When the crash occurred, many prospective buyers were saddled with less-than-stellar credit.

The result: Home prices dropped and rental rates increased.  Rental vacancy rates dropped and starts for multi-family housing increased. Even today, single-family housing starts have not exceeded the pre-collapse levels of more than 1 million a year.

Moreover, homeownership remains low with fewer Americans owning homes than ever before. Rising consumer confidence does not appear to be changing that.

The nation’s homeownership rate dropped to a record low in 2016 from a record high in 2004.

The number of renters who said they don’t know when they expect to move rose to 37 percent in March compared with 30 percent in a survey conducted last September, according to a survey released recently by Freddie Mac, which helps finance the multifamily apartment market.

In a separate survey, Zillow found that more than two-thirds of renters said that saving for a down payment was keeping them from buying a home.

According to Zillow’s “Housing Aspirations Report,” about half of all renters surveyed cited debt and the inability to qualify for a mortgage as hurdles to homeownership.
Another layer shows that despite appreciating home prices, rents have been rising at a much faster rate. This actually can further hamper homeownership rates.

“Rising rents are also a factor — it’s extremely difficult to save when you’re paying record-high rents,” Zillow’s chief economist, Svenja Gudell said in a release. “For those trying to save for a down payment, it’s important to set realistic goals and realize it may take a few years.”

According to the National Association of Realtors, its Housing Affordability Index was up 52 percent in the fourth quarter of 2016 from the early 2007 low.

Demographics may play a key role going forward, with millennials a key segment of the population that real estate professionals continue to keep watch over. It would appear that with a large number of Americans in the perfect age range to buy a first home, there would be a ready market for single-family homes or at least more apartment rentals.

However, the current home ownership rate of about 63 percent, while below historic high-level marks, still is at about normal historic average, meaning there isn’t a suppressed demand for housing waiting to bounce back.

The mixed signals that can be gleaned from current data isn’t all bad news. It can be approached with some measure of optimism, albeit cautious optimism. Demographics do favor the potential for rising homeownership rates.

We have seen the real estate market bounce back from the abyss and surveys indicate that Americans are shifting from apartments