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The State of the Nation’s Housing

Harvard University Report Features CoreLogic Data

Molly Boesel    |    Housing Trends

Today the Joint Center for Housing Studies of Harvard University released the 2016 State of the Nation’s Housing report, and the report included several references to CoreLogic data and analyses. The report highlighted four major themes: household growth is getting back on track, the homeowner market faces lingering headwinds but should improve, the rental market continues to lead the housing recovery and affordability challenges remain significant.

The pace of household growth picked up in 2015 with the number of households growing by 1.3 million[1] – the largest single-year increase in a decade. This was after very slow household formation following the housing crash. Further, over the next 10 years, the millennial generation is expected to form two million households per year. Millennials are behind in terms of household formation, and the share of adult millennials living in their parents’ homes is still rising.

Years of elevated foreclosures, low household formation rates, low income growth and tight mortgage credit have left homeownership rates near 50-year lows. Completed foreclosures have eased and are now a little under 500,000 per year, well below the peak level of 1.2 million per year hit in 2010. Household formation is increasing, and real income growth, especially among younger households should help shore up the homeownership rate. However, mortgage credit remains tight and demographic shifts, such as later age of first marriage, will have a dampening effect on the homeownership rate.

With the decrease in homeownership comes gains in rental demand. The rental market continued to grow in 2015 and drove the housing recovery. According to the Census Bureau’s Housing Vacancy Survey, 2015 saw the largest one-year increase in renter households. Demand for rentals rose across all ages groups, income levels and household types.

Increased rental demand and increased household growth have downsides. Construction has not kept up with demand, especially at the low-price end of the market, with much of the new rental units intended for the upper end of the market. The Joint Center reports that the number of cost-burdened renters[2] reached a record high in 2014 with 83 percent of the lowest-income renter households classified as cost-burdened.

We encourage you to read further details of the State of the Nation’s Housing. The State of the Nation’s Housing report has been released annually since 1988, and serves as a resource for policy makers and housing industry leaders.

1 Source: Census Bureau Housing Vacancy Survey

2 Cost-burdened renters are defined as those renters paying more than 30 percent of their income for housing.

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