Harvard Report Details Stalled Momentum for Housing Recovery
In its recently released report, “The State of the Nation’s Housing 2015,” the Joint Center for Housing Studies of Harvard University paints a picture of a housing industry with its fair share of challenges, particularly on the single-family side. For multifamily housing, many positive trends continue, although affordability continues to be a major problem.
The report presents a rather bleak outlook for single-family housing, as construction has remained near historic lows and the nation’s homeownership rate dropped to 64.5% for 2014 and 63.7% for the first quarter of 2015. Conversely, the share of U.S. households that rent their housing increased to a 20-year high of 35.5% in 2014, the tenth consecutive year of growth. The report points out that although the increase in renter households is typically attributed to millennials, in fact the households aged 45-64 made up twice the share of renter growth than households aged 35 or younger. In 2014, the national vacancy rate dropped to 7.6%, the lowest it has been in nearly two decades. That decrease led to an increase in rents, which rose at a rate of 3.2% in 2014.
On the positive side, the report notes that multifamily construction continues to be a bright spot for the industry, as construction starts rose to nearly 360,000 units in 2014 which is higher than any other year in the 1990s and 2000s. Those new units are primarily being built for high-income renters, however, as they have a median asking rent of $1,290 which is about half of the typical renter’s monthly household income. As such, affordability continues to be a major concern despite the surge in new construction of multifamily units. Other key findings from the report include:
- The number of renter households has grown an average of 770,000 annually since 2004.
- The 20 hottest rental markets (where rents rose more than 5%) were all located in the West or South.
- The number of households with housing cost burdens—paying more than 30% of income for housing—declined for the third straight year, falling from 40.9 million in 2012 to 39.6 million in 2013.
- Nearly 2.2 million assisted housing units could be lost from the affordable stock over the next decade, including more than 1.2 million in LIHTC developments whose compliance periods are set to end.
The full report can be found here: http://www.jchs.harvard.edu/research/state_nations_housing.