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
| Jul 20, 2014
IPD contract saves time and money for cancer center [2014 Building Team Awards]
Partners share the risk and reward of extreme collaboration on this LEED Silver project, which relies heavily on Lean principles.
| Jul 20, 2014
Why every major U.S. city should be nurturing ‘Innovation Hubs’
Today, more than ever, tech districts are the key to economic growth for metro markets. A new report from the Brookings Institution calls tech hubs the superchargers of innovation economies and creators of highly coveted tech jobs.
| Jul 18, 2014
Contractors warm up to new technologies, invent new management schemes [2014 Giants 300 Report]
“UAV.” “LATISTA.” “CMST.” If BD+C Giants 300 contractors have anything to say about it, these new terms may someday be as well known as “BIM” or “LEED.” Here’s a sampling of what Giant GCs and CMs are doing by way of technological and managerial innovation.
| Jul 18, 2014
Top Construction Management Firms [2014 Giants 300 Report]
Jacobs, Barton Malow, Hill International top Building Design+Construction's 2014 ranking of the largest construction management and project management firms in the United States.
| Jul 18, 2014
Top Contractors [2014 Giants 300 Report]
Turner, Whiting-Turner, Skanska top Building Design+Construction's 2014 ranking of the largest contractors in the United States.
| Jul 18, 2014
Engineering firms look to bolster growth through new services, technology [2014 Giants 300 Report]
Following solid revenue growth in 2013, the majority of U.S.-based engineering and engineering/architecture firms expect more of the same this year, according to BD+C’s 2014 Giants 300 report.
| Jul 18, 2014
Top Engineering/Architecture Firms [2014 Giants 300 Report]
Jacobs, AECOM, Parsons Brinckerhoff top Building Design+Construction's 2014 ranking of the largest engineering/architecture firms in the United States.
| Jul 18, 2014
Top Engineering Firms [2014 Giants 300 Report]
Fluor, Arup, Day & Zimmermann top Building Design+Construction's 2014 ranking of the largest engineering firms in the United States.
| Jul 18, 2014
Top Architecture Firms [2014 Giants 300 Report]
Gensler, Perkins+Will, NBBJ top Building Design+Construction's 2014 ranking of the largest architecture firms in the United States.
| Jul 18, 2014
Top Architecture/Engineering Firms [2014 Giants 300 Report]
Stantec, HOK, and Skidmore, Owings & Merrill top Building Design+Construction's 2014 ranking of the largest architecture/engineering firms in the United States.
