JCHS Report Sheds Light on Lack of Affordable Housing Production
Harvard University’s Joint Center for Housing Studies (JCHS) today released its annual report, “The State of the Nation’s Housing 2019.” The report examines the state of the housing market in 2018, finding that, while the housing market improved in many respects over the previous year, including household growth and formations, the continued — and worsening — production shortfall has led to an increasing number of low- and moderate-income families who lack access to affordable housing options.
JCHS released the report during an event held at the Atlanta Federal Reserve. The release was followed by a panel discussion featuring Raphael Bostic, president and CEO of the Federal Reserve Bank of Atlanta; Chris Herbert, managing director of the JCHS; Jonathan Reckford, CEO of Habitat for Humanity; and Carol Tomé, CFO of The Home Depot. Amy Scott, a senior correspondent covering housing for the Marketplace, served as moderator. Watch the event in its entirety here.
A Worrisome Lack of New Production
The report states that, since the low mark in 2011 when 633,000 new units were constructed, the available housing stock has grown at an average annual rate of just 10 percent. In 2018, the number of units completed and placed into service was 1.2 million. Excluding the 10-year period between 2008-2017, 1.2 million units was the lowest annual housing production number since 1982. JCHS believes the sluggish recovery of new housing construction from the Great Recession has increased pressure on home prices and rents, which, in turn, negatively impacts affordability for moderate- and low-income households, especially in high-cost metro areas.
In 2018, new household formations grew to 1.2 million, about the expected levels based on demographic trends according to the report. The low point — just 534,00 new households formed — occurred in 2009. Despite the rebound, new construction lagged significantly behind historical levels of supply versus demand. JCHS found that since 1974, “annual additions to the housing supply exceeded household growth by an average of 30 percent.” Applying that same calculation to 2018, new production would be expected to reach 1.5 million units — 260,000 more units than were actually produced.
A Continued Upward Trend in the Homeownership Rate
Prior to 2017, the country’s homeownership rate had fallen for 13 consecutive years. In 2018, the rate rose to 64.4 percent, which is on par with the average rate between 1985–1995, before the previous housing boom-and-bust cycle. While the 0.5 percentage point increase in homeownership from 2017 to 2018 appears modest, 1.6 million more people became homeowners. JCHS cites the 25–39 age group as the cohort that saw the largest increase in homeownership: 1.1 million owners since 2016.
The Share of Cost-Burdened Renters Decreased, But Many Still Paying Too Much on Rent
JCHS reports the number of renters paying 30 percent or more of their incomes on rent fell for the seventh consecutive year; the latest available figures are from 2017. The share of cost-burdened renters was 31.5 percent in 2017, which is 5.7 percent lower than the peak in 2010. The total number of cost-burdened renters fell by 4.9 million households in the same eight-year window, to 37.8 million renters in 2017.
A Call to Action
JCHS concludes that more must be done to address the large number of individuals and families who are not able to secure affordable housing as income growth continues to be outstripped by the increases in rent and home prices. JCHS contributes the current tight housing market conditions, in part, to years of inadequate federal funding for rental assistance. The report also highlights the need for a more robust national commitment to making homes more resilient and energy efficiency in order to mitigate the impact of increasingly frequent and severe natural disasters.
