EMERGING FROM today’s housing slump could take some time, according to The State of the Nation’s Housing, a yearly report released by the Joint Center for Housing Studies of Harvard University.
The 2008 report, which finds the housing downturn shaping up to be the worst in 50 years, paints a grim portrait of the nation’s growing affordability challenges.
“In 2006, 17.7 million households were paying more than half of their incomes for housing, with the numbers and shares in nearly all age groups and family types—and at all levels of work—on the increase,” said the report.
Households that pay more than 50 percent of their incomes for housing are considered severely cost burdened.
From 2001 to 2006, the number of these households swelled by nearly 4 million. More than half of the increase was among homeowners.
On top of the affordability problems, more households are losing their homes to foreclosure, said the report, which cited estimates from the Mortgage Bankers Association that the number of loans in foreclosure more than doubled from an annual average of 455,000 in recent years to nearly 940,000 in the fourth quarter of 2007.
In the wake of the turmoil in the for-sale market, “rental housing is reasserting its importance in U.S. housing markets,” according to the report.
Despite growing demand, completions of rental units in multifamily buildings fell to 169,000 in 2007, down 15 percent from 2006 and 38 percent from 2000.
In the long run, “demand for rental housing will depend on both demographic trends and financial market conditions, including the cost and availability of mortgage credit,” said the report. A growing share of minority households and the strong pace of immigration will support solid growth in rental households.
Overall household growth is expected to be about 14.5 million over the next 10 years.