Harvard Joint Center Report Outlines Housing Recovery, Outlook

On June 14, the Joint Center for Housing Studies at Harvard University released its annual report entitled, “The State of the Nation’s Housing,” stating that although it appears that the United States housing market has turned a corner, lower home prices and high unemployment pose a risk that the recovery could be limited or short-lived.  According to the report, in mid-2009 it seemed as though existing house sales had revived, but this was due in large part to the first-time home buyer tax credit, which has since expired.

Unemployment, which economists predict will remain high, will be a large determinant of the “future strength and stability of the housing recovery.”  While home building and home sales improved last year, the foreclosure crisis deepened in 2009 as the impact of huge job losses spread to the broader market.  Because of falling home prices, one in seven homeowners have homes worth less than what they owe on their mortgages and nearly 5 million will be “underwater” until home prices increase by 25 percent.

The report found that 18.6 million people—a new high—spent more than half their incomes on housing in 2008.  The report also discusses other housing challenges and opportunities, including how energy savings in homes could contribute to carbon emission reductions and the impact of immigration on housing demand.