Harvard’s State of the Nation’s Housing Report Highlights Housing Affordability Challenges
The Harvard Joint Center for Housing Studies (JCHS) has released its State of the Nation's Housing 2022 report, highlighting the housing affordability challenges ahead, following a year of rising housing costs and demand.
According to the report, home price appreciation was 20.6% in March 2022, while rents rose 12% in the first quarter of 2022 — with rents in some metros increasing more than 20%. These increases have created additional hurdles to first-time and middle-income buyers to purchase a home, especially amid rising costs for other necessities such as food and gas.
"At today's prices, the typical downpayment that a first-time buyer would need for a median-priced home is $27,400," Alexander Hermann, a JCHS senior research analyst, said in a press release. "Without help from family or other sources, this would rule out 92% of renters, whose median savings are just $1,500."
Other key findings include:
- Recent interest rate hikes amount to a 27% jump in home prices for monthly mortgage payments, which have increased by more than $600 a month on a median-price home.
- The greatest homeownership increases occurred in the under-45 age group, as millennials were able to capitalize on strong income gains and low employment to achieve stronger financial footing.
- Rapidly rising home prices have increased the wealth gap between home owners and renters, with home owners cashing out $275 billion in equity in 2021 — the highest level since 2005.
Supply-chain constraints have left some 1.64 million new homes still under construction — the highest level since 1973. The State of the Nation report notes the increase in starts for single-family and multifamily construction in 2021 may help slow rising housing prices and rents; however, data recently reported by NAHB indicates housing starts are slowing in 2022.
NAHB Chief Economist Robert Dietz noted in a recent Eye on Housing post that there are now 822,000 single-family homes and 843,000 apartments under construction — a 24% year-over-year increase in total housing units now under construction.
"The number of units under construction is rising on both the total volume of construction, as well as longer construction times," Dietz concluded. "However, it appears the number of single-family units in the construction pipeline is now peaking for this business cycle."
Visit the JCHS website to see more, including the full report and interactive data tables.