Homeownership Rates Drop to Historic Lows; Middle Class Feels the
Strain of Rising Rents
Source: Harvard
The fledgling U.S. housing recovery lost momentum last year as homeownership rates continued to fall,
single-family construction remained near historic lows, and existing home sales cooled, concludes a new
report titled “The State of the Nation’s Housing” from the Joint Center for Housing Studies of Harvard
University.
Making sense of the story

Rental markets continued to grow, fueled by another large increase in the number of renter
households. However, with rents rising and incomes well below pre-recession levels, the U.S. is
also seeing record numbers of cost-burdened renters.

The flip side of falling homeownership rates has been exceptionally strong demand for rental
housing, with the 2010s on pace to be the strongest decade for renter growth in history.

While soaring demand is often attributed to the millennials’ preference to rent, households aged
45–64 in fact accounted for about twice the share of renter growth as households under the age of
35.

The other byproduct of this surge in rental demand is that the national vacancy rate fell to its
lowest point in nearly 20 years. Given the limited supply of rental units, rents rose at a 3.2 percent
rate last year—twice the pace of overall inflation.

While the cost-burdened share of homeowners began to recede in 2010 (because some homes
were lost to foreclosure, and low interest rates helped other homeowners reduce their monthly
costs), the cost-burdened share of renters has held near record highs. In 2013, almost half of all
renters had housing cost burdens.

Cost burdens are climbing the income ladder, affecting growing shares of not just low-income
renters but moderate- and middle-income renters as well.

The cost-burdened share of renters with incomes in the $30,000–45,000 range rose to 45 percent
between 2003 and 2013, while one in five renters earning $45,000–75,000 are now cost-burdened
as well.
Read the full story
http://www.jchs.harvard.edu/research/state_nations_housing
In other news …
Think California's housing crisis is tough in LA? Try Coachella.
Source: KPCC
Bob Soloman, head of UC Irvine Law School’s Community and Economic Development Clinic,
commented the following about the housing crisis in the Coachella Valley: “Really, the housing shortage
is abysmal. It’s worse than anything I’ve seen. […] Mobile home parks are springing up. But they’re
springing up in fairly haphazard ways, they’re not well maintained. They’re often un-permitted." Many
areas where working class families are living lack adequate electrical systems and waters systems, such as
the trailer parks cited by Soloman. Blown fuses and dirty water in115 degree weather has made for poor
living conditions for such residents, but due to a lack of housing options, poor families have been forced
to make due.
Read the full story
http://www.scpr.org/news/2015/06/30/52758/affordable-housing-crisis-bleeds-into-californias/
Do Home Builders Understand What Buyers Want?
Source: Wall St. Journal
Are home builders doing a good job of determining what home buyers want? Not according to Nela
Richardson, chief economist for brokerage Redfin Corp., and Selma Hepp, chief economist for Zillow
Group’s Trulia real-estate website. Richardson and Hepp noted that builders aren’t constructing enough
entry-level housing to meet demand; instead, they are tailoring construction toward luxury buyers with
ample credit. While builders may not be so sure about the financial prospects of entry-level buyers, the
economists say this demographic has demand that is adequate and increasing.
Read the full story
http://blogs.wsj.com/economics/2015/06/25/economists-home-builders-neglecting-entry-level-market/
HUD Secretary Op-Ed: Make Sure Every Child in America Can Chase
Their Dreams
Source: Quartz
Julián Castro, United States Secretary of Housing and Urban Development (HUD), is calling for greater
investment in public schools, infrastructure, and housing in order to ensure that every child – no matter
where they live or how much they earn – can make it in America. Castro notes, “We must promote smart,
inclusive planning in every community. We can’t have one plan for the suburbs and another for cities.
Instead, we must view our communities as connected, because they are.” The HUD secretary touts a new
initiative that HUD is launching in partnership with the U.S. Departments of Energy and Education called
“STEM, Energy, and Economic Development” or “SEED.” SEED will leverage federal investments and
partnerships to connect public housing residents to energy-sector training and jobs.
Read the full story
http://qz.com/440195/julian-castro-we-must-make-sure-every-child-in-america-can-chase-their-dreams/
Want a shorter commute? Pay $900 a month to live in a tent near Google
Source: SF Gate
In a sign of just how bad the housing market has gotten in the Bay Area, a man has offered a tent to rent
in his backyard for $900 due to the lack of available rental options in the region. The owner stated, “It
kind of is (outrageous). But maybe they should build more affordable housing in Mountain View." As a
way to lure a renter for the tent, the owner advertised it as a "safe and friendly" neighborhood, "very close
to Caltrain," and "in a beautiful garden."
Read the full story
http://www.sfgate.com/bayarea/article/Want-a-shorter-commute-Pay-900-to-live-in-a-6349066.php
Poll: Housing Scarcity Concerns Surpass Water Worries in San
Francisco
Source: KQED
San Francisco is the epicenter of housing concern for the whole Bay Area, as finding an affordable place
to live ranked higher than worries about California’s extreme drought in the 2015 Bay Area Council Poll.
More than three-quarters of Bay Area residents support building more low- to middle-income housing,
and a growing number of people favor greater density in their neighborhoods if it would create more
places to live. Bay Area Council President Jim Wunderman commented, “Water isn’t the only thing that’s
in short supply in the Bay Area. We need a bold regional response to our historic housing crisis that is on
par with the aggressive and immediate action we’re taking to combat the drought.”
Read the full story
http://ww2.kqed.org/news/2015/06/25/poll-housing-scarcity-concerns-surpass-water-worries-in-sanfrancisco
Renting: Awful for just about everyone right now
Source: Atlantic
Apartment vacancy rates are very low, thereby pushing up prices. Construction in many cities is still
slow, as new tenants move in but few move out, which has resulted in high rental prices. For those who
live in major metro areas, it’s become virtually impossible not to have one’s housing costs exceed about
one-third of a person’s pay. As prices rise, even those who make median incomes are finding that their
rent eats away at a more significant portion of their pay than it once did for those in the middle class.
Complicating the problem is the fact that fewer households are making the transition from renting to
owning, which means more competition for limited inventory.
Read the full story
http://finance.yahoo.com/news/renting-awful-just-everyone-now-115800504.html
Talking Points …

Contract signings to buy a home rose for the fifth straight month in May to the highest level in
more than nine years, according to the National Association of REALTORS®.

Pending home sales climbed 0.9 percent to 112.6 last month, the best pace since April 2006,
which was ahead of the housing crisis.

April's level of 111.6 was slightly lower than first reported but is 10.4 percent above May 2014,
putting sales on their best start since the downturn in 2007. Low mortgage rates and job growth
have helped get buyers back into the market.