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SEARCHAffordability Remains a Problem
June 27, 2007
Despite the slowdown in sales and smaller gains in appreciation — or, in some places, no gains at all — the nation’s biggest housing challenge is affordability, according to the latest report from Harvard’s Joint Center for Housing Studies.
While the housing market will recover in due course, prospects aren’t great for those trying to get a toehold on the housing ladder, the report says.
“In just one year, the number of households spending more than half their income on housing increased a startling 1.2 million to 17 million in 2005,” notes Rachel Drew, a research analyst at the Joint Center. “Even if prices or rents soften for a period of time, the nature of (our) labor markets, the regulatory restrictions imposed on residential development, and the fiscal limits of government assistance to cost-burdened households will make affordability a long-term challenge.”
Some Americans try to escape these cost burdens by taking longer commutes and incurring higher travel costs, while others double up or live in substandard housing or undesirable neighborhoods. But Drew reports that the prospects for a substantial easing of these problems are dim.
On a positive note, Eric Belsky, the Center’s executive director, likes what he sees for the market as a whole. “While it will take time to work out current loan problems and work off the oversupply of homes, the long-term outlook for residential investment remains strong,” he reports.
Largely, as a result of a record number of new immigrants arriving in the United States in the 1990s and larger numbers entering this decade, net household growth is poised to accelerate by about 2 million to 14.6 million households by 2015. In addition, incomes and wealth stand higher for most households in real terms than 10 years ago. This should translate into solid growth in both new construction and remodeling spending over the next 10 years compared with the last 10.
-Realty Times June 28, 2007
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