HOMEOWNERSHIP RATES DROP TO HISTORIC LOWS; MIDDLE CLASS FEELS THE STRAIN OF RISING RENTS

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

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JULIAN CASTRO: WE MUST MAKE SURE EVERY CHILD IN AMERICA CAN CHASE THEIR DREAMS

Where you live should never determine how far you go in life. That principle was central to our nation’s founding, and it has remained an enduring promise for generations of Americans. It’s why we’ve invested in public schools, infrastructure and housing. And it’s why we’ve come together, time and again, to ensure that no matter how the times may change, one thing remains the same–that in the United States, anyone can go as far as their hard work will take them.

It’s time to renew our commitment to this founding ideal. As I learned on a recent visit to Ferguson, MO, sometimes the reach of a child’s dreams depends more on where they are born than on where they want to go. In fact, a child growing up in the Clayton area of St. Louis can expect to live 18 years longer than a child living just eight miles away in the JeffVanderLou neighborhood.

In a nation founded on the principle of equal opportunity, that’s unacceptable.

The leaders who came together earlier this month for the 2015 meeting of Clinton Global Initiative America called on every sector and community to address a central question our society must answer: “How do we ensure that everyone–no matter where they live or how much they earn–can make it in America?”

Answering that question will require us to invest in three key areas. First, we must ensure that all communities provide their citizens with a strong foundation, which means ensuring folks have clean water, that electricity and transportation are reliable and available to everyone, that neighborhoods are safe, and that the housing market is free from discrimination and affordable to Americans up and down the income scale. The U.S. Department of Housing and Urban Development makes each of these basics a cornerstone of our local and regional partnerships as part of our Sustainable Communities and Choice Neighborhoods initiatives.

I can’t stress enough how critical safe neighborhoods are to economic opportunity–it’s nearly impossible for a child to make it in America if she can’t even make it to school. That’s why in Chicago we’ve joined forces with a non-profit and the City to revitalize the Woodlawn neighborhood. In addition to renovating hundreds of units of affordable housing and creating new market-rate units, we’re also helping to boost public safety. The University of Chicago has agreed to place its public safety officers at key locations along school routes to protect the children who live in nearby public housing. No child should have to riskrobberies or violence to get an education, and I’m proud that the University of Chicago has made the community’s children their children as well.

Second, 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. Just look at what Denver–CGI America’s host city for the past two years–did in the 1980s to jumpstart its then struggling economy. The surrounding suburbs joined forces with urban neighborhoods to invest in creating a vibrant core to boost the entire region. HUD, in partnership with the U.S. Department of Transportation, is working with local officials to build on that work by expanding permanent affordable housing, improving access to jobs, and enhancing connectivity along Denver’s transit corridors. We’re fighting to advance these goals in more communities, which is why President Barack Obama has proposed greater funding for HUD initiatives that promote inclusive planning and that provide housing support and choices to low-income families.

Finally, our nation must make the investments necessary to prepare citizens, especially our youth, to compete in the global economy. That means we must cultivate brainpower and match it to economic opportunity. Creating great schools is a vital step, but it can’t be the only one. We must also create enrichment opportunities for young people outside of the classroom. That’s why HUD is investing in educational opportunity for children in a number of communities, including in the Yesler neighborhood in Seattle.

Working with the Gates Foundation, the local housing authority, and the school board, we’ve created an after-school tutoring program for 400 students. And the results have been impressive. Between 2011 and 2013, science scores for fifth graders rose from 15 percent who met the state standard to nearly 60 percent.

We also know that prosperity hinges on empowering tomorrow’s American workforce with tangible pathways to employment, especially ones that lead to industries of the future. So HUD is now committing through CGI America to connect more public housing residents to continuing education and job training opportunities. That includes a new initiative 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 in Washington, DC, Cleveland, Tampa, San Antonio and Denver to connect public housing residents to energy-sector training and jobs, helping them boost their skills and their earnings.

This is a start, and we will keep working to build communities of promise. Creating a new national agenda that tackles the inequality crisis and fosters enduring prosperity will require leadership, engagement and vision. And it will require that we work together. If we are to make equal opportunity real for every American, we must ensure that all citizens–no matter their income or zip code–have a fair shot to pursue their dreams.

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DO HOME BUILDERS UNDERSTAND WHAT BUYERS WANT?

Two real-estate economists said Thursday that many home builders aren’t doing a good job of determining what home buyers want.

Nela Richardson, chief economist for brokerage Redfin Corp., and Selma Hepp, chief economist for Zillow Group’s Trulia real-estate website, both said builders aren’t constructing enough entry-level housing to meet demand. They’re focusing more of their resources instead, the economists said, on building pricey homes for buyers with ample credit.

“If there is any speculation in building, it’s going to be toward the higher end,” Ms. Richardson said, speaking during a panel discussion at the National Association of Real Estate Editors’ annual conference in Miami.

By speculation, she meant building homes without buyers already signed up. Building entry-level homes on a “spec” basis was a common practice before and during last decade’s real estate boom, when there was ample demand for those homes.

But that entry-level demand fell off dramatically in the downturn and since, with many entry-level buyers hampered by strict mortgage-qualification standards and mounting student debt. Meanwhile, demand for pricier homes remains strong, so builders can safely construct spec homes in that segment. But determining if entry-level demand is recovering well enough to warrant wide-scale spec building of less expensive homes requires builders to make an educated guess about future demand.

The economists say entry-level housing demand is adequate and increasing. But many builders aren’t so sure.

“First-time purchasers have begun coming back to the housing market, more slowly than expected and more slowly than they have historically,” Stuart Miller, chief executive ofLennar Corp. said during the builder’s call Wednesday to discuss its fiscal second quarter results with investors. “They’ve had the most difficulty accessing the mortgage market. And although that is beginning to open up … they are not yet jumping into the marketplace.”

Both economists noted that condominium construction generally is depressed relative to demand because builders are focused more on rental apartments. Condos are a common landing spot for first-time buyers because condos are smaller and less expensive than detached, single-family homes.

Trulia’s Ms. Hepp said builders are wary of building condo projects due to theprevalence of construction-defect lawsuits filed in various states by condo owners associations. Redfin’s Ms. Richardson added that it’s easier and less risky for builders to sell a newly constructed multifamily complex to a single institutional buyer rather than piecemeal to scores or hundreds of individual buyers as condos.

The economists were split on whether home construction will fully return in far-flung suburbs, often called exurbs. Builders had all but abandoned those areas in the downturn, because the price-sensitive buyers that favor the less-expensive housing built in the exurbs had stopped buying and many buyers favor the shorter commutes to and from homes closer to the city center.

“Every indication is that millennials want something different,” Ms. Richardson said in explaining her prediction that the exurbs won’t fully return to favor. “They want to feel connected to their neighbors and their communities.”

Ms. Hepp countered that price is the driving factor for many buyers. “Why people go to the exurbs is because of affordability,” she said.

The economists each cited data from their firms’ surveys regarding buyer preferences. Recent Trulia surveys found that two out of five buyers prefer new homes because they want modern features, the ability to customize amenities and less need for maintenance and repairs, Ms. Hepp said. She added that roughly half of respondents said they want larger homes than those they were in.

Redfin surveys found that 36% of buyers cited convenience as the main factor driving their home purchase, 11% cited affordability and 5% said they primarily want a newly built home.

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