As the Housing Recovery Strengthens, Affordability and Other
Challenges Remain: Harvard Study
The national housing market has now regained enough momentum to provide an engine of growth for the US economy, according to The State of the Nation’s Housing report released this week by Harvard’s Joint Center for Housing Studies. However, several obstacles continue to hamper the housing recovery—in particular, the lingering pressures on homeownership, the eroding affordability of rental housing, and the growing concentration of poverty.
Making sense of the story
On the renter side, the number of cost-burdened households rose by 3.6 million from 2008 to 2014, to 21.3 million. Even more troubling, the number with severe burdens (paying more than 50 percent of income for housing) jumped by 2.1 million to a record 11.4 million.
The national homeownership rate has been on an unprecedented 10-year downtrend, sliding to just 63.7 percent in 2015. Tight mortgage credit, the decade-long falloff in incomes that is only now ending, and a limited supply of homes for sale are all keeping households—especially first-time buyers—on the sidelines.
The report finds that income inequality increased over the past decade, with households earning under $25,000 accounting for nearly 45 percent of the net growth in US households in 2005–2015.
The report finds that rent burdens are increasingly common among moderate-income households, especially in the nation’s 10 highest-cost housing markets, where three-quarters of renters earning $30,000–45,000 and half of those earning $45,000–75,000 paid at least 30 percent of their incomes for housing in 2014.
Federal assistance reaches only a quarter of those who qualify, leaving nearly 14 million
households to find housing in the private market where low-cost units are increasingly scarce.
Low-income households with cost burdens face higher rates of housing instability, more often settle for poor-quality housing, and have to sacrifice other needs—including basic nutrition, health, and safety—to pay for their housing.
The report notes that a lack of a strong federal response to the affordability crisis has left state and local governments struggling to expand rental assistance and promote construction of affordable housing in areas with access to better educational and employment opportunities.
March existing home sales and median price accelerate from previous month and year
California home sales rose from both the previous month and year to post the highest sales pace in six months, while strained housing supplies continued to push home prices higher, according to the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).
Making sense of the story
Existing, single-family home sales totaled 415,220 in March on a seasonally adjusted annualized rate, up 5.5 percent from February and 5.7 percent above March 2015.
March’s statewide median home price was $483,280, up 8.9 percent from February and up 4 percent from March 2015.
The median number of days it took to sell a single-family home declined in March to 29.9 days, compared with 41.4 days in February and 34.2 days in March 2015.
March’s sales level rose above the 400,000 level for the first time in three months.
C.A.R. President Pat “Ziggy” Zicarelli commented, “California’s housing market is moving in the right direction as we enter the spring home-buying season, but sales growth will likely be isolated in areas where inventory is more abundant and housing affordability is less of an issue. For example, in the Bay Area, where inventory is extremely tight, annual sales are down in the double-digits in seven of the region’s nine counties.”
The number of active listings increased slightly for the third consecutive month after declining for five straight months, but was not enough to boost housing supplies. Active listings increased 3.9 percent from February on a statewide basis.
The increase in active listings was outpaced by the rate of home sales, causing C.A.R.’s Unsold Inventory Index to drop from 4.6 months in February to 3.6 months in March.