The U.S. housing recovery should regain its footing, but also faces a number of challenges, concludes The State of the Nation’s Housing report released by the Joint Center for Housing Studies of Harvard University. Tight credit, still elevated unemployment, and mounting student loan debt among young Americans are moderating growth and keeping millennials and other first-time homebuyers out of the market.
“The housing recovery is following the path of the broader economy,” says Chris Herbert, research director at the Joint Center for Housing Studies. “As long as the economy remains on the path of slow, but steady improvement, housing should follow suit.”
Although the housing industry saw notable increases in construction, home prices, and sales in 2013, household growth has yet to fully recover from the effects of the recession. Young Americans, saddled with higher-than-ever student loan debt and falling incomes, continue to live with their parents. Indeed, some 2.1 million more adults in their 20s lived with their parents last year, and student loan balances increased by $114 billion.
Still, given the sheer volume of young adults coming of age, the number of households in their 30s should increase by 2.7 million over the coming decade, which should boost demand for new housing. “Ultimately, the large millennial generation will make their presence felt in the owner-occupied market,” says Daniel McCue, research manager of the Joint Center, “just as they already have in the rental market, where demand is strong, rents are rising, construction is robust, and property values increased by double digits for the fourth consecutive year in 2013.”
One key to realizing the millennials’ potential in the housing market is for the economy to grow to the point where their incomes start to rise. Another important factor is how potential GSE reform will affect the cost and availability of mortgage credit for the next generation of homebuyers, which will be the most diverse in the nation’s history. By 2025, minorities will make up 36 percent of all US households and 46 percent of those aged 25–34, thus accounting for nearly half of the typical first-time homebuyer market.
The report, as well as an interactive map released by the Joint Center, also highlights the ongoing affordability challenge facing the country, as cost burdens remain near record levels and over 35 percent of Americans spend more than 30 percent of their income for housing. The situation is particularly grim for renters, where 50 percent are cost burdened and 28 percent are severely cost burdened (meaning they spend over half of their income for housing).
“When available, federal rental subsidies make a significant difference in the quality of life for those struggling the most,” says Herbert. “Between 2007 and 2011, the number of Americans eligible for assistance rose by 3.3 million, while the number of assisted housing units was essentially unchanged. Sequestration forced further cuts in housing assistance, which have yet to be reversed.”
Related Stories
3D Printing | Dec 7, 2018
Additive manufacturing heads to the jobsite
Prototype mobile 3D printing shop aims to identify additive manufacturing applications for construction jobsites.
Architects | Dec 6, 2018
Payette honored with 2019 AIA Architecture Firm Award
The award recognizes a firm that has consistently produced distinguished architecture for at least 10 years.
Biophilic Design | Nov 19, 2018
Biophilic design: What is it? Why it matters? And how do we use it?
As we continue to move toward the city and spend more time indoors, our day-to-day interaction with quality nature is shrinking. One contemporary concept to reverse this effect is biophilic design, a strategic approach to tap into—and harness—nature in the built environment.
Architects | Nov 6, 2018
Kohn Pedersen Fox opens three new offices
Following exciting current work, new commissions, and upcoming opportunities, global architecture firm embraces the future with new outposts.
Architects | Oct 2, 2018
Gensler, in latest report, highlights where resilient design could make the greatest impact on the built environment
The firm showcases its own recent projects as demonstrations for what can work in six areas.
Architects | Sep 24, 2018
Assembly (and rigorous planning) required: Managing the pros and cons of modular construction
While offering efficiency and flexibility, modular construction requires extensive planning and collaboration to avoid potential challenges.
Architects | Sep 19, 2018
Back it up: Parking lot trends
There are two shifts that we are seeing in parking lot planning and design – and these shifts are rooted in parking’s place at the intersection of environment, transportation, and market behavior.
Architects | Sep 14, 2018
We’ve entered the golden age of brain science. What does it mean for AEC firms?
New research from the SMPS Foundation explores the known principles and most recent research surrounding the human brain and behavioral science. The goal: to discover connections between the science and the AEC business.
Architects | Sep 6, 2018
S/L/A/M Collaborative completes merger with L.A.-based firm
The healthcare sector is one of Frank Webb Architects’ strengths.
Giants 400 | Sep 6, 2018
What's happening at 89 design firms
The latest developments at 89 of the nation's largest architecture and architecture/engineering (AE) firms.