Industry indicators such as rising prices, increases in construction, and declines in the number of underwater homeowners tell a story of a broad housing recovery, butHarvard’s Joint Center for Housing Studies (JCHS) sheds light on a less popular story in a report released Wednesday.
“With rising home prices helping to revive household balance sheets and expanding residential construction adding to job growth, the housing sector is finally providing a much needed boost to the economy,” says Eric S. Belsky, managing director of JCHS.
“But long-term vacancies are at elevated levels in a number of places, millions of owners are still struggling to make their mortgage payments, and credit conditions for homebuyers remain extremely tight. It will take time for these problems to subside,” he said.
Homeownership is down, and consumer spending on housing as a portion of income is up.
Thirty-seven percent of households were spending more
than 30 percent of their pre-tax income on housing in 2011, according to the Center’s report.
Furthermore, 17.9 percent of the nation’s households were spending more than 50 percent of their pre-tax incomes on housing. These households, which the Center considers “severely burdened,” have increased 49 percent since 2001.
Market conditions are pushing more households into rentals, even those in categories that used to maintain high homeownership rates, such as couples with children, high-income households, and white households, the report states.
“For each 10-year age group between 25 and 54, the share of households owning homes is now at its lowest point since recordkeeping began in 1976,” the Center states.
Additionally, while foreclosures and delinquencies are declining, they remain at historically elevated levels.
The delinquency rate fell from its peak of 10.1 percent in the first quarter of 2010 to 7.3 percent in the first quarter of this year.
“Still, more than 1.4 million homes were in foreclosure, representing 3.6 percent of all mortgages in service,” the report states, adding that this equates to more than four times the average rate between 1974 and 1999.
Amid this still-bleak environment, the federal budget sequestration will reduce rental housing assistance.
“Given the profoundly positive impact that decent and affordable housing can have on the lives of individuals, families, and entire communities, efforts to address these urgent concerns as well as longstanding housing affordability challenges should be among the nation’s highest priorities,” Belsky said.