Emerging Housing Crisis
by David Levine, President/CEO
In his recent article for the Washington Post, Mark Zandi of Moody’s Analytics points to the emerging crisis in housing. Whether it is through owning or renting a house, Zandi is clear that the crisis is around affordability.
For the low- to moderate-income homeowner, it is the higher costs of construction and financing. (Thirty-year fixed-rate mortgages are at 5%, up from 4% a year ago). For the low-income renter, it is a lack of affordable rental properties that drives rents higher for them.
As Zandi notes, the construction of high-end apartments and houses rebounded strongly from the 2008 recession. At the same time, the supply of new housing for lower-income households lagged behind the demand for this housing. (Zandi reports that only 50,000 new single-family homes under 1,400 square feet were built — a quarter of what is typically produced after a recession).
Zandi also writes: “The deepening affordable-housing shortage is clear in the evaporating number of vacant housing units. The percent of the housing stock for rent and sale that no one is living in has plunged since the housing crash and is now as low as it has been in more than 30 years.”
This lack of supply only increases the rents and prices of affordable housing. It deepens an already troubling crisis in the housing markets.