On June 19, the Harvard University Joint Center for Housing Studies (JCHS) held an address and panel discussion at the National Press Club in Washington D.C. to formally present its 30th annual State of the Nation’s Housing report. Since 1988, the report has offered invaluable, applicable information on the housing industry for policymakers, investors, and developers. A webcast of the event and a PDF of the report can be found here.
An address from Senior Research Associate Daniel McCue touched on the report’s main themes and significant housing industry trends. On a positive note, the overall home ownership rate increased for the first time in several years, which parallels the recent decrease in the number of rent-paying households. But, besides these statistics, the report also finds some dirt. Home ownership rates for young adults and African-Americans are at historic lows. There are also other points of concern in line with the housing industry’s challenges of the last thirty years. The report points out the lack of necessary for-sale inventory to meet the rising demand from new households headed by millennials and immigrants. A further challenge to meeting this supply is within rising costs of labor supply and materials. The Center estimated that from 2016-2017, overall input prices rose 4%, softwood lumber prices rose by 13%. In addition, the rise of mortgage payment and rent prices are outpacing wage growth at an alarming rate, leaving many renters cost-burdened. More people are even paying over 50% of their monthly income on housing. Home prices are close to pre-recession levels, but this increase is pressuring the slowly growing incomes of consumers and perpetuating a need to develop more affordable housing.
In regards to developing this need, the report contains some interesting details. The amount of starts fell 9.7% from 2016 to 354,100 units, and this decrease was especially apparent in the Midwest, with starts falling by over 20%. On a more positive note, the amount of completed units rose by 11% to 357,600, and the amount of units under construction is at a similar level to that of 2016, the highest level of units under construction since the 1970’s. A majority of these Multifamily units are being built within urban centers, but there is still a great need for more units specifically built as affordable housing. In fact, the center measures a shortage in housing of 7.2 million units for Very Low Income renters, who earn less than 50% of an area median income. These troubling signs of a lower level of starts and this demand are symbols of a nationwide crisis that requires a great amount of focus and insight to solve.
A panel consisting of Former HUD Secretary Shaun Donovan, the Federal Reserve Community Affairs Director, the President of the Lincoln Institute of Land Policy, and the Director of the JCHS built off from the address with an insightful discussion. Highlights from the panel included observations on the rise of urban gentrification crowding out affordable housing to the outskirts of metropolitan areas, the tendency of baby boomers to age-in-place yielding a greater need to provide ADA-accessible housing, the need to concentrate on absolving zoning and land issues as a solution to provide more urban housing supply, and the stark contrast between the undeveloped market for necessary shelter and the saturated housing market centered on high-value investment.
The rigor and insight of the session exemplified the utility and importance of conducting empirical research to evaluate the housing market and related public policy. If policymakers and developers apply the findings of the Report into their work, it is much more likely that findings of the report published thirty years from now will be more optimistic.