Just like all of us, the housing market in 2019 is competitive, unequal and just getting by, according to Harvard University’s Joint Center For Housing Studies Annual Report: “The State of the Nation’s Housing.” The report calls the 2018 market cool down “somewhat surprising” due to the low unemployment rate, strong economy and slight wage growth while pointing to lack of affordability as the “primary culprit.”
The 2019 “State of the Nation’s Housing Report” tackles the scarcity of housing first. “The duration of today’s tight (supply) condition is unprecedented,” according to the report. The Joint Center estimates a shortage of approximately 260,000 units with new construction lagging behind household growth for eight years. The report cites the 2018 vacancy rate for owner-occupied homes as the lowest since 1995. The vacancy rate for rentals matched 2016 for the lowest level since 1985. Combining owner-occupied home and rental rates together, the vacancy rate was 4.4%, the lowest since 1994.
More than +311,000 higher-income people (incomes of $75,000+/year) were renting in 2018 than in 2017 and in Q1 2018, only 9% of all newly constructed, completed apartments had asking rents below $1,050/month. This focus of new construction on higher-cost units, 91% of new construction, has “…shifted the overall distribution of rents upward,” according to the report.
No wonder +20% of households that are renting now pay 30%-50% of their income on housing costs and 25% of households renting are paying +50% of their income on housing costs. Nearly 75% of households with incomes of $15,000 or less are spending +50% of their incomes on housing.
Consequences of high rents are two-fold…only 31% of young adults ages 25-29 fund their own households, they spend just 25% of their incomes on health care and 33% of their incomes on transportation. Second, after a multi-year decline, homelessness rose in 2018 for the second consecutive year, as did the number of unsheltered homeless population for the third consecutive year.
Homeowners did better than renters in 2018, but not across the board. The share of cost-burdened owners (owners spending +30% of incomes on housing costs) fell to its lowest level of the century in 2018. Home equity and home prices kept rising. And, despite credit conditions easing a bit, more and more areas became increasingly unaffordable in 2018.
Ownership rates among ethnic groups looked like this in 2018, according to the Joint Center’s report on the State of the Nation’s Housing…
- 42.9% – African American
- 47.1% – Hispanic
- 57% – Asian
- 73% – Caucasian