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
Giants 400 | Aug 4, 2015
GIANTS 300 REPORT: Top 106 Architecture Firms
Gensler, Perkins+Will, and Kohn Pedersen Fox top Building Design+Construction's 2015 ranking of the largest architecture firms in the United States.
Giants 400 | Aug 4, 2015
ARCHITECTURE GIANTS: 21 practice management innovations from architecture Giants
Design firms have gone all out with management innovations in the last year. Check out which ones might work for your firm.
Architects | Aug 4, 2015
Frank Lloyd Wright School of Architecture closer to independent incorporation
The school is halfway to its first fundraising milestone, but is facing a major deadline at end of this month.
Industrial Facilities | Aug 3, 2015
Architect Jacques Rougerie envisions floating city to function as roving laboratory
The manta ray-shaped vessel will be completely self-sustaining, run on marine energy, and produce no waste.
Cultural Facilities | Aug 3, 2015
Funding needed for Washington's Desert Storm memorial
The National Desert Storm Memorial Foundation has a $25 million goal for the project.
Sports and Recreational Facilities | Jul 31, 2015
Zaha Hadid responds to Tokyo Olympic Stadium controversy
“Our warning was not heeded that selecting contractors too early in a heated construction market and without sufficient competition would lead to an overly high estimate of the cost of construction,” said Zaha Hadid in a statement.
Architects | Jul 30, 2015
The Lego Architect: Book offers simple how-to steps for recreating iconic buildings with Legos
The book features famous buildings accompanied with a photograph and drawing of the Lego model of the building, and a list of all the Lego pieces needed to complete a model of the building.
Transit Facilities | Jul 30, 2015
Snøhetta designs ring-shaped cable car station in Italian Alps
In Snøhetta’s design, two cylindrical rings embedded into the existing topography, each at different elevations, will be connected by a cable car. During the minute-long cable car journey, passengers can enjoy views of the city and of the Italian Alps.
Office Buildings | Jul 29, 2015
Design plans for Fannie Mae’s new HQ revealed
The developer/owner, Carr Properties, envisions a 1-million-sf plus mixed-use center with a large retail pavilion.
Sports and Recreational Facilities | Jul 29, 2015
Milwaukee Bucks arena deal approved by Wisconsin state assembly
Created by Milwaukee firm Eppstein Uhen Architects and global firm Populous, the venue will be built in downtown Milwaukee. Its design draws inspiration from both Lake Michigan, which borders Milwaukee, and from aspects of basketball, like high-arcing free throws.