Data from the “
While rising home prices, growing demand and housing construction “has finally turned the corner, giving the economy a much-needed boost,” the report finds lasting concerns prevail.
Millions of homeowners are still delinquent on their mortgages or owe more than their homes are worth. In the first quarter of 2013, more than 1.4 million homes were in foreclosure, representing 3.6% of all mortgages in service, the report notes. The share of loans at some stage of delinquency but not yet in foreclosure declined to 7.3%, from the 10.1% peak in the first quarter of 2010, yet more than four times the 1974-1999 average of 0.8%.
Others who already have lost their homes to foreclosure have joined the 25- to 54-year-old demographic that currently has "the lowest homeownership rate since recordkeeping began in 1976,” mostly due to lack of means than preference.
According to managing director of the Harvard University’s Joint Center for Housing Studies, Eric Belsky, “The national homeownership rate fell for the eighth straight year in 2012,” despite historically low interest rates that “make the monthly cost of owning a home more favorable than any time in the past 40 years.”
Tight credit is limiting their ability to take advantage of the market and likely discouraging first-time buyers from even trying, says Chris Herbert, director of research at the Joint Center for Housing Studies. “At issue is whether, and at what cost, mortgage financing will be available to borrowers across a broad spectrum of incomes, wealth and credit histories moving forward.”
Data show there is no recovery in housing costs. In other words, millions of affordable housing seekers are unhappy with the housing market, including a 1.1 million increase in renter households, especially those who face high overall housing cost burdens.
Findings indicate the number of Americans “shelling out half or more of their incomes on housing is at an all-time high.”
By 2011 42.3 million, or 37% of all households that paid more than 30% of pretax income on housing costs, including 20.6 million households with severe cost burdens, paid more than 50% of pretax income for housing.
Between 2001 and 2011, the number of severely burdened households increased by 6.7 million, or 49%. Since the beginning of the recession in 2007, the increase has been 2.6 million.
Between 2007 and 2011, the number of severely burdened renters soared by 2.5 million and now account for 27.6% of the total number of cost-burdened households.
In California, New York and New Jersey, more than 22% of households pay more than 50% of pretax income for housing, as median home values and rents in these states are among the highest in the country.
April 2013 marked the 34th consecutive month of growth in rents as measured by the consumer price index, and the 15th consecutive month of year-over-year increases of 2.5% or more.
At last count, the report notes, “20.6 million households were shouldering such severe burdens.” That number includes nearly seven out of ten households with annual incomes of less than $15,000, which is “roughly equivalent to year-round employment at the minimum wage.”
Going forward the federal budget sequestration “will pare down the number of households receiving rental housing assistance,” affecting many people with disabilities.
“The housing sector is finally providing a much needed boost to the economy,” Belsky said, even though long-term vacancies are at elevated levels in a number of places and “millions of owners are still struggling to make their mortgage payments,” which indicates it will take time for these conditions to improve.
The U.S. homeownership rate fell for the eighth straight year in 2012, from 66.1% to 65.4%, “reflecting a net loss of 161,000 homeowners for the year.”
The decline was more pronounced for minorities. At 43.9% the African-American homeownership rate dropped to its lowest level since 1995. The homeownership rate of Hispanics and whites also is at the lowest in a decade, at 46% and 73.5% respectively.
Technically, if one ignores the still above average unemployment rate and income (the last measure of the median household income in 2011 showing a 1.5% decline in real terms compared to 2010 to stand 8.1% below the 2007 peak and 6.7% below the 2001 level), rising home prices are the best sign of recovery.
It is good news that between the fourth quarter of 2011 and the fourth quarter of 2012, the number of underwater homeowners fell 1.7 million to 10.4 million.
Overall, according to Belsky, efforts to address urgent concerns as well as longstanding housing affordability challenges "should be among the nation’s highest priorities.”
