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
| Dec 6, 2011
Mortenson Construction completes Elk Wind Project in Iowa
By the end of 2011, Mortenson will have built 17 wind projects in the state generating a total of 1894 megawatts of renewable power.
| Dec 6, 2011
?ThyssenKrupp acquires Sterling Elevators Services
The acquisition of Sterling Elevator Services Corporation is the third acquisition completed by ThyssenKrupp Elevator AG in the last three months in North America.
| Dec 6, 2011
Vivenzio named vice president of building performance practice at Thornton Tomasetti’s New York Office
Vivenzio, a licensed architect in New York and New Jersey, has more than 28 years of experience in architectural project management, construction administration, building diagnostic services and forensic investigation.
| Dec 6, 2011
New office building features largest solar panel system in New Orleans
Woodward Design+Build celebrates grand opening of new green headquarters in Central City.
| Dec 5, 2011
New York and San Francisco receive World Green Building Council's Government Leadership Awards
USGBC commends two U.S. cities for their innovation in green building leadership.
| Dec 5, 2011
Summit Design+Build begins renovation of Chicago’s Esquire Theatre
The 33,000 square foot building will undergo an extensive structural remodel and core & shell build-out changing the building’s use from a movie theater to a high-end retail center.
| Dec 5, 2011
Fraser Brown MacKenna wins Green Gown Award
Working closely with staff at Queen Mary University of London, MEP Engineers Mott MacDonald, Cost Consultants Burnley Wilson Fish and main contractor Charter Construction, we developed a three-fold solution for the sustainable retrofit of the building.
| Dec 5, 2011
RJM Construction begins building Nova Classical Academy in St. Paul
As the general contractor, RJM is constructing the 94,000-sf building that will consolidate the St. Paul school’s two other locations.
| Dec 5, 2011
Gables Residential brings mixed-use building to Houston's Tanglewood area
The design integrates a detailed brick and masonry facade, acknowledging the soft pastel color palette of the surrounding Mediterranean heritage of Tanglewood.
| Dec 5, 2011
SchenkelShultz Architecture designs Dr. Phillips Charities Headquarters building in Orlando
The building incorporates sustainable architectural features, environmentally friendly building products, energy-efficient systems, and environmentally-sensitive construction practices.
