June 21, 2010
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NCSHA thanks Daniel McHue, Research Analyst at the Harvard Joint Center for Housing Studies, for contributing this blog post.

Challenging times continue for the housing market, according to The State of the Nation’s Housing 2010. The report, released annually by the Joint Center for Housing Studies, provides a periodic assessment of the nation’s housing outlook and summarizes important trends in the economics and demographics of housing. Among the many issues addressed, the report concludes that while showing signs of life in 2009 – largely due to the influence of federal homebuyer tax credits and Treasury purchases of mortgage debt – housing markets now look to jobs and economic growth to drive a sustainable recovery.        

Last year, widespread house price declines, lower interest rates, and a first-time homebuyer tax credit sparked life into housing markets. But while lower prices were good for buyers, it added pressure to current homeowners, especially those looking to move or refinance in an environment of constricted credit and high unemployment. By the end of the year, nearly a quarter of mortgaged homeowners owed more than their homes were worth. The millions of underwater mortgages contributed to the over two million foreclosures that were started in the year, which, in turn, added to the stubbornly high number of vacant homes on the market both for rent and for sale. Adding insult to injury, the rebound in home sales and prices had also faltered by years end, remaining low until March and April and the expiration of the homebuyer tax credit.
 
The recession became the main contributor to the relentless growth in households with severe housing cost burdens(those dedicating over half their incomes to housing). Such affordability challenges have increased by over 5 million households since 2001 showing that this vulnerability is immune to neither housing boom nor bust. Softening rents have done little to help the 45 percent of severely burdened households who are low-income renters.
 
The recession has also significantly impacted household growth. For immigrants, the high unemployment rate has meant reduced immigration or even emigration.  For native-born residents – especially the oldest of the over 80 million echo-boomers now entering their primary household formation years – it has meant delayed formation, or doubling up or moving back in with parents. Lasting impacts of such a deep recession on immigration, household headship rates, and housing demand over the long run remain a key question for housing, but even if immigration were to drop to half the US Census expected levels over the next decade, demand for new housing is expected to exceed 17 million. 
 
According to the report, a review of demographic trends show housing will need to continue to adapt to fit the needs of a larger, increasingly diverse nation. It will also need to be more energy efficient, both in terms of the housing itself and its patterns of development. Trends detailed in the report point to the potential for significant reductions in energy consumption through both new construction and remodeling of the existing stock and the vehicle travel necessary to travel to and from residences.