So, this year’s State of the Nation’s Housing report from the Harvard University Joint Center for Housing Studies has been released.
In contrast to prior years, where the organization raised concerns about the ever-rising cost of housing, this year the think-tank focuses on the subprime housing crisis, plus the on-going struggle for young and foreign buyers to raise enough money to buy their own homes.
In one simple paragraph, here’s the current state of the nation’s housing, and the outlook for the coming years.
The Outlook
The accelerating pace of household growth, together with the large number of households in their peak wealth and income years, bodes well for housing over the coming decade. Given the uneven distribution of income and wealth, construction demand will be weighted toward luxury homes, major remodeling projects, seniors housing, and second homes. Additional demand for rental units and starter homes will come from the echo boomers as they move into the peak household formation years
.
At the same time, working families, younger households, and minorities will face new affordability challenges. Some of the need for more modest housing will be met by the existing housing stock as the homes owned by older generations in inner-ring suburbs turn over to younger buyers. But in fast-growth areas, the existing stock will be unable to accommodate the rising number of young households.
Unless local governments ease some of the regulatory constraints on development, the home building industry can do little to supply additional affordable units in these areas.
Basically, I take this to mean that, absent some cataclysmic event, housing prices will, at worst, continue to rise, at best, stay stagnant, because there is so much money out there, because there is so little land to build on, and because demand will continue to outstrip supply, due to demographic shifts in the US population.
Complete report: The State of the Nation’s Housing 2007 – Joint Center for Housing Studies, Harvard University
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