What’s the Low-Down on This Housing Market? Harvard Weighs In.

The Joint Center for Housing Studies at Harvard has just published its 2024 State of the Nation’s Housing report.



The headlines say it all, right? While construction is starting to bolster inventories, the new report notes certain persistent issues: record numbers of people struggling to stay housed, with climate change complicating everybody’s future.

Let’s look at what the research found, and what it means for the next few years.

Surprise! Housing Costs Keep Going Up.

Home prices continue to inflate — even with the Federal Reserve keeping banks’ interest rates high. Many would-be home buyers are put off by the current mortgage rates of around 7%.

Because in addition to high borrowing rates, there are those eye-popping listing prices. Home prices have continued breaking records in 2024. U.S. home prices are now close to 50% above where they were five years ago.

Sellers have made themselves scarce. Sales of existing homes have drooped to even lower levels than where they were after the housing crash in 2008.

Meanwhile, Rents Are Up More Than 25%.

Obviously, paychecks have not risen accordingly. Half of U.S. renters are in financial trouble, Harvard finds. And still, demand for rentals is high.

“Multifamily” investors are flourishing. Chances are, you’ve seen new developments turning up in a neighborhood near you, behind signs that advertise them at eyepopping prices.

The rising population of renters could spark still more price surges — in what’s already the most forbidding housing market in living memory.

The owners of these units feel market pressures nonetheless. The Harvard study takes note:

  • Year-over-year, the cost of rental management and upkeep is up 7% overall.
  • The rise in rental management costs was inevitable, once U.S. real estate owners’ insurance premiums shot up more than 27%.
  • The sharp rises in operating costs have led income growth to tumble.  

Now, add all this to the costs of getting loans, and it’s clear that a real estate investor’s profits are hard-won today.  

The Higher Costs of Acquiring Deeds Worsens Inequality.

We’re not all equally impacted by the unkindness of this market. It has taken a particular toll on minority households, people with children, and those who work hardest for their money. The researchers point out that only 8% of Black renters and 13% of Hispanic renters could take on the typical U.S. monthly household mortgage payment in 2024.

Senior research associate Daniel McCue describes homeownership as “out of reach to all but the most advantaged households.” Not bringing in $100K a year? Then the typical home in nearly half of the major U.S. real estate markets is out of reach.

No wonder so many renters find this market such a tough nut to crack. Yet continuing to rent will hold many of these households back financially. Most jobs aren’t handing out raises to cover housing inflation. Rents versus wage growth is a ratio that worsened terribly in the throes of the pandemic in 2020. Since that time, the cost of being housed has surged 47%.

And now, hundreds of thousands of people in this country are without homes at all.

For deed holders, meanwhile, the picture is not exactly rainbows and sunbeams. Yes, home values have soared, and so has their home equity. Yet insurance companies hiked their premiums about 21% in just a single year, from 2022 to 2023. And property taxes are swelling along with home values.

When will these financial stresses let up? Likely not soon. It’s not just that the number of people who’d like to acquire deeds outpace the number of available homes for sale. It’s also that the housing crisis is years in the making. So the situation won’t be quickly turned around.

More Buyers Look at New Construction—Because It’s There.

Current homeowners (especially those who picked up super-low interest mortgages a few years ago) have proven seriously reluctant to transfer their deeds. This has given home builders an edge in the market. Today, if they can supply it, someone will demand it.

Surprising no one, newly constructed house sales went up from 12% of single-unit sales in 2021 to 15% in 2023.

Some home builders have responded to real needs. Some are meeting hopeful buyers where they are, by producing smaller, less expensive homes.

And yet the Harvard study shows:

  • Most builders still focus on high-end homes.
  • Smaller, less expensive, starter-style homes are way too scarce.

Building activity could even become a drag on the market. Once interest rates ease and people start selling again (late-year home sales boom, anyone?), we could learn that those active new home builders have overcompensated for the current high demand. Texas and Florida are commonly called out for their recent development sprees.

But for now, builders are in the driver’s seat.

If It’s Not One Thing… The Climate and Housing Crises Are Starting to Merge.

Another significant challenge? Homes are starting to show signs of wear they’ve never shown before in a changing climate. A key factor is the damage from an uptick in “one in a hundred years” weather events, recurrent floods, and wildfires. This means a segment of the homes that become available are going to be at-risk homes. 

The Harvard study tells us:

  • Costly disasters are on a sharp rise.
  • More than 60 million homes are situated in areas with at least moderate risk from natural disasters.

Better zoning could help this situation. That’s because building on less space can spare a good deal of Earth from paving and heat island effects. But across much of the country, zoning restrictions remain rigid.

And the Low-Down Is…Straightforward and Sobering.

According to Harvard’s researchers, the cost of acquiring and holding the deeds to our homes (even adjusted for inflation) is the highest it’s been since people started keeping track three decades ago.

Millions of people who want to buy homes are sidelined. And the cost of getting on a foot on the ladder just won’t stop rising. The new report by the Harvard Joint Center for Housing Studies suggest that this situation could get even harder for ordinary people to navigate.

Leadership at the Harvard Joint Center believes it’s possible to make things better. But how? Seems it’ll take a village. Improvements, we learn, can be gained if governments at every level work together with businesses and nonprofit groups. Without an all-hands-on-deck response, ordinary people will keep being left out in the cold.

Supporting References

Kerry Donahue, Director of Communications for the Joint Center for Housing Studies of Harvard University via JCHS.Harvard.edu: Press Release – New Report Shows Housing Costs Strain Owners and Renters Alike; Millions Priced Out of Homeownership (published on Jun. 20, 2024; announcing The State of the Nation’s Housing 2024).

Jennifer Ludden and Daniel Wood for National Public Radio WHYY via NPR.org: U.S. Home Prices Have Far Outpaced Paychecks. See What It Looks Like Where You Live (Jun. 20, 2024; citing figures from the Joint Center for Housing Studies of Harvard University cited in the above press release).

And as linked.

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