The housing market has been pushing the limits of growth over the past six months. Housing prices are posting exorbitant growth month-after-month, mortgage rates are already up about over 50 basis points, and stark levels of available inventory have created a hyper-competitive housing environment.
The Joint Center for Housing Studies of Harvard just released its 30th-anniversary edition of the State of the Nation’s Housing report. The report analyzes housing trends over the past year that have impacted prices, supply, and affordability today.
- Average home prices were up 5.9% while the lowest-cost home prices were up 8.5% for all of 2017
- Single-family construction cannot keep up with the explosive demand for housing
- Lowest-cost rentals are growing the fastest, creating more affordability problems for low-and-moderate income households
The Harvard report points out that negative equity as reported by CoreLogic no longer appears to be a drag on sales. Negative equity shrank from 12.1 million mortgages in 2011 to 2.5 million in 2017. Rather, a factor in the low housing supply is slow growth in single-family construction that has not kept up with demand. State of the Nation’s Housing report.
Low housing supply has contributed to increases in home prices. Home prices, according to the CoreLogic HPI were up by 5.9 percent for all of 2017. Prices for the lowest-cost homes (those homes priced at 75 percent or less than median) were up by 8.5 percent, compared with 4.7 percent for the highest-cost homes (those homes priced at 125 percent or more than median). Along with home price increases, there have also been increases in rents.
The increases in home prices and rents have outpaced increase in incomes and have contributed to affordability problems. High prices and low supply constrain access to homeownership, but affordability issues are more immediate for some households. The CoreLogic SFRI shows that the lowest-cost rentals are showing the fastest rent growth, adding to affordability challenges to low-and-moderate income households.
View the original article at the CoreLogic Insights blog