State of the Nation’s Housing

The Joint Center for Housing Studies at Harvard University just released its latest State of the Nation’s Housing report.

From the executive summary:

After a record-shattering year in 2021, the housing market is at an inflection point. Higher interest rates
have already taken some heat out of the homebuying market, and the large number of apartments
under construction should bring some relief on the rental side. For lower-income households and
households of color, though, the pressure of high housing costs is unlikely to relent. The surge in
the prices of gas, food, and other necessities has made matters worse, especially now that most
emergency government supports have ended. The housing stock itself is in dire need of investment to
meet the demands of a rapidly aging population and the threats posed by climate change.

 

Other notable data points include:

• Home price appreciation nationwide hit 20.6 percent in March 2022—topping the previous high of 20.0 percent in August 2021 and marking the largest jump in three decades of recordkeeping.
• Rents for apartments in professionally managed properties were up 12 percent nationally in the first quarter of 2022 from a year earlier, with increases in several metro areas exceeding 20 percent.
• Rents for single-family homes rose even faster than those for apartments, pushed up by increasing demand for more living space among households able to work remotely. According to CoreLogic data, single-family rents nationally rose 14 percent in March 2022, the 12th consecutive month of record-high growth.
• Although leveling off from the record surge in 2021, both home prices and rents are still rising because of the severe constraints on supply.
• In early 2022, the homeownership rates of Black households stood at just 45.3 percent— some 28.7 percentage points below the rate for white households. Although the homeownership rate for Hispanic households was somewhat higher at 49.1 percent, the gap was still substantial at 24.9 percentage points.
• The impact on monthly mortgage payments of the 2.0 percentage point hike in interest rates between late December 2021 and mid-April 2022 is equivalent to that of a 27 percent jump in home prices.
• At today’s prices, the down payment that a first-time buyer would have to make on a median-priced home—typically 7.0  percent of the sales price—amounted to $27,400 in April 2022. Without help from family or other sources, this requirement  alone would rule out 92 percent of renters, whose median savings are just $1,500.
• New construction adds housing supply primarily at the upper end of the market. In just the past two years, the share of new homes that sold for at least $400,000 increased from a third of all homes to more than half (56 percent). Meanwhile, the typical asking rent for new multifamily units stood at $1,740 per month in 2021, well above the $1,080 affordable to the median renter.
• Chronic labor shortages and restrictive local land use regulations, among other factors, make it difficult for developers to build modestly priced housing. The pandemic exacerbated these challenges by causing a runup in building material prices and labor costs.
• As estimated by Moody’s Analytics, the median sales price for existing homes last year was 5.3 times the median household income—well above the 4.6 ratio in 2020 and a notable increase from the previous peak of 4.9 in 2005. By comparison, price-to-income ratios averaged 3.9 in the 2010s, 4.1 in the 2000s, and just 3.1 in the 1980s.
• The Joint Center projects that the number of households headed by adults age 65 and over will surge from about 33 million in 2018 to more than 50 million in 2038, lifting the older-adult share of all households from 26 percent to 34 percent. In  addition, the number of households in their 80s and older is expected to more than double from 8.1 million to 17.5 million over this period.