Housing and its perception of being the centerpiece of the idyllic "American dream" has been the same for decades. Now, the force of the economic forces and demographic shifts reported here by the Harvard Joint Center for Housing Studies, are at the point to change the entire equation. And, now, it's time for the housing community to respond.
This year marked 30 years since the Joint Center released its first report in 1988 and this year’s report – like its predecessors – includes a number of statistics that surprised even the experienced researchers who prepare it. Here are ten that strike me as particularly notable from the 2018 report:
1. The average number of single-family homes for sale during 2017 was lower than at any point since 1982. Inventories, which have been low for several years, declined in 80 percent of the major metros tracked by Zillow. As a result, only one of these metros (Bridgeport, CT) had a for-sale inventory of more than 6 months, the amount commonly used to indicate a balanced housing market. One factor behind the lack of new inventory was that the U.S. added fewer new single-family units over the last 10 years than any 10-year total going back to the early 1960s – just 614,000 annually.
2. One in three homeowners is age 65 or over. In Joint Center household projections a few years ago, we anticipated that by 2035, one in three households would be age 65 or over. However, this year’s State of the Nation’s Housing report notes that in 2016 one in three homeowners already were 65 or over. This is a by-product of both the aging of the population (10,000 baby boomers turn 65 every day) and the sharp decline in homeownership rates among younger adults over the past two decades. The shift has had many implications. Given that older owners move less frequently, in many markets it has helped reduce the number of homes for sale. And where limited supplies have driven up home prices, those gains have created wealth for older owners and increased challenges for younger renters who want to become homeowners.
3. Only one in three renters has more than $10,000 in assets (INTERACTIVE). This is particularly notable because renters seeking to buy the median-priced home in the U.S. need about $14,000 to cover both a 3.5 percent down payment and to pay the estimated 2 percent in closing costs for that home. Even if they have the assets, many renters cannot afford the monthly mortgage payments needed to purchase recently-sold homes in many places, particularly large metros. At the extreme, only 11 percent of all renter and owner households in the Los Angeles metro (owners and renters) have incomes large enough that their monthly mortgage payment for the median-priced home sold in 2017 would not be more than 30 percent of their income. This means that 89 percent of that region’s households could not afford to buy the median priced home sold in the Los Angeles area in 2017.
4. Only 11 percent of the population moved in 2017. This is notable because it is the lowest mobility rate recorded since the government began tracking moves in the early 1960s. The decline in mobility is partially due to the overall aging of the population, but mostly due to sharp declines in mobility across age groups and particularly the young adults who, contrary to conventional wisdom, are the least mobile generation of young adults in recent history.
5. Households headed by immigrants accounted for 47 percent of household growth between 2010 and 2016. In contrast, immigrants accounted for 15 percent of household growth in the 1980s, 32 percent in the 1990s, and 41 percent in 2000s. Moreover, as the native-born population growth slows, immigration will be the primary driver of growth in total population and, in turn, growth in households. Assuming that the nation continues to add slightly more than one million net immigrants a year, as it has over the past four years, by 2040, immigration will account for two-thirds of total annual population growth in the U.S.
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