The Joint Center for Housing Studies at Harvard has released its annual “The State of the Nation’s Housing” report. It’s good reading (at least take a look at the graphs and charts!).
What’s new? Well, surprisingly, the report shows that “the vast majority of Americans still pay a manageable share of their income for housing”, however, “affordability problems are worsening”.
Interestingly, the boom that began in 1993 “puts households in their 20s and 30s (the echo boomers and the baby-bust generation) on a distinctly higher homeownership trajectory than previous generations. While homeownership rates have gone up across the board, younger and minority households have made the largest percentage-point gains”.
Year 2004 / Year 2005 / Years 2004-2005 / Years 2001-2005
Homeownership Rate: 69.0% / 68.9% / -0.1% / 1.6%
# of New Single-Family Sales (Millions) 1.2 / 1.3 / 6.7 / 41.3
# of Existing Single-Family Sales (Millions) 6.0 / 6.2 / 3.4 / 30.6
# of Existing Condo/Co-ops Sales (Thousands) 820 / 896 / 9.3 / 49.1
Median Home Prices
New Single-Family Homes: $230,842 / $240,900 / 4.4% / 23.2%
Existing Single-Family Homes: $200,158 / $219,000 / 9.4% / 27.7%
Existing Condo/Co-ops: $197,930 / $223,900 / 13.1% / 43.1%
The not-so-good news is that renters, especially those in the bottom income brackets, are paying more and more in rent, as a percentage of income.
And, according to other published reports, the rental housing they live in is increasingly in poor shape, and / or in danger of being removed from the rental rolls, either because of demolition or conversion to condominium housing.
In summary, the authors believe:
“(T)he housing sector continues to benefit from solid job and household growth, recovering rental markets, and strong home price appreciation. As long as these positive forces remain in place, the current slowdown should be moderate.
Over the longer term, household growth is expected to accelerate from about 12.6 million over the past ten years to 14.6 million over the next ten.
When combined with projected income gains and a rising tide of wealth, strengthening demand should lift housing production and investment to new highs.
But with the economy generating so many low-wage jobs and land use restrictions driving up housing costs, todayâ€™s widespread affordability problems will also intensify.”
Six years of owner and renter information, 1999 – 2005
Owner’s monthly income / Home price / Mortgage Rate / Mtg payment (pre-tax) / Mtg payment (post tax) / Mtg payment as % of income (pre-tax) / Mtg payment as % of income (post-tax)
$4,890 / $155,338 / 7.1 / $943 / $900 / 19.3% / 18.4%
$4,840 / $160,835 / 7.9 / $1,048 / $988 / 21.7% / 20.4%
$4,742 / $168,791 / 6.9 / $1,005 / $954 / 21.2% / 20.1%
$4,715 / $177,382 / 6.4 / $1,003 / $956 / 21.3% / 20.35
$4,740 / $185,077 / 5.7 / $964 / $944 / 20.3% / 19.9%
$4,705 / $200,158 / 5.7 / $1,043 / $1,013 / 22.2% / 21.5%
$4,672 / $219,000 / 5.9 / $1,164 / $1,119 / 24.9% / 23.9%
(Of course, this is nationwide data, which makes the results almost meaningless to those in more expensive cities.)
Source: State of the Nation’s Housing, 2006 (pdf) – Joint Center for Housing Studies at Harvard University
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Updated: January 2018