On Wednesday Harvard issued its twenty-fifth annual State of the Nation’s Housing report. This one was entitled, “A Housing Recovery But Not For All Americans.” Although the report acknowledged, “housing construction has finally turned the corner,” it emphasized that millions of Americans are still underwater or in default on their mortgages. Despite the increase in home prices in 2012, existing homes on the market fell to their lowest since 2001 with the overall housing inventory (four months supply) at its lowest since 2004.
Eric Belsky, Managing Director of Harvard’s Joint Center for Housing Studies, noted last year “the national homeownership rate fell for the eighth straight year” despite record low mortgage interest rates. Homeownership rates for 25-54 year olds was at its lowest point in almost forty years apparently due, in large part, to credit strictures on prospective buyers. Investors now constitute twenty percent of single-family homebuyers, and they are converting those properties to rentals.
With an increased demand for rentals, tenants are paying historically high percentages of their income on housing. Almost seventy percent of those at minimum wage levels (about $15,000/year) are paying more than half their income on housing. Meanwhile, the availability of federal rent subsidies is declining.