U.S. in 'Worst Rental Affordability Crisis' Ever
As rental demand grows, soaring rents are taking a bigger bite out of households’ pocketbooks.
About half of renters spend more than 30 percent of their income on rent, up from 18 percent a decade ago, according to newly released research by Harvard’s Joint Center for Housing Studies. Twenty-seven percent of renters are paying more than half of their income on rent.
"We are in the midst of the worst rental affordability crisis that this country has known," says Shaun Donovan, U.S. Secretary of Housing and Urban Development.
Rising rents mixed with a stunted wage growth has created an affordability problem, the study notes. Between 2000 and 2012, real median rents rose nationwide by 6 percent. However, over that same time period, the real median income of renters fell by 13 percent.
A shortfall in affordable units is particularly troublesome as low-income renters struggle to find a place, the study notes.
"Over four years, [there’s been] a 43 percent increase in the number of Americans with worst-case housing needs," says Donovan. "Let's be clear what that means: They're paying more than half of every dollar they earn for housing."
Young professionals are also turning to renting and finding higher rents to be a hurdle to getting ahead. Many have plans for home ownership one day: Nineteen out of 20 people under the age of 30 say they intend to buy a home in the future.
"There is no question that the will toward home ownership remains there — [the problem is] the way,” says Eric Belsky, director of Harvard’s Joint Center for Housing Studies. However, rising home prices and mortgage rates, high student loan debt, and tightened credit is holding many back and forcing them to continue to rent.
Sales of new single-family homes skyrocketed in October, ending a three-month slump that began in July and providing evidence that elevated mortgage rates have not seriously hobbled the housing recovery.
New-home sales leaped 25.4 percent from September to October to a seasonally adjusted annual rate of 444,000, according to data released today by the U.S. Census Bureau and the Department of Housing and Urban Development (HUD). On an annual basis, sales of new single-family homes increased by 21.6 percent.
Shift To Urban Headquarters Favors Cities Like Boston
After decades of big businesses leaving the city for the suburbs, U.S. firms have begun a new era of corporate urbanism. Nearly 200 Fortune 500 companies are currently headquartered in the top 50 cities. Many others are staying put in the suburbs but opening high-profile satellite offices in nearby cities, sometimes aided by tax breaks and a recession that tempered downtown rents. And upstart companies are following suit, according to urban planners. The bottom line: companies are under pressure to establish an urban presence that projects an image of dynamism and innovation.
FHA Conforming Loan Limits To Stay In Place for 2014
Whether because of the uproar from some members of Congress, the Mortgage Bankers Association, National Association of Realtors, and other industry players or not, Edward J. DeMarco, Acting Director of the Federal Housing Finance Agency (FHFA) has left loan limits for Fannie Mae and Freddie Mac unchanged for the coming year.
Some high costs areas such as Washington, DC, New York, Boston, and large parts of California are exempt from the $417,000 ceiling with limits that range as high as $625,000. This upper limit is also unchanged. It is possible there are areas that have previous fallen into the jumbo mortgage category between the two loan limits that may now be capped at the national limit or have experienced some changes in maximums depending on local calculations.
DeMarco had announced in late summer that he would roll back the limits to a lower level for the coming year as another step in reducing the influence of the GSEs in the mortgage market and encouraging greater participation by the private sector. The industry groups above and others sent letters both to FHFA and to Congress protesting any downward revisions as potentially harmful to homebuyers, refinancers, and the housing market recovery.
A link to a spreadsheet with a county by county breakdown of the new limits is available at www.FHFA.gov.
MA October Unemployment Rate was 7.2%, up from 6.7% one year ago.
MA has been stuck at 7% or higher since June.
NAR Expects Home Sales of 5.13 Million this year, 5.12 Million in 2014 and Prices To Trend Higher
The National Association of Realtors is forecasting that home prices will continue to post gains next year, but that sales of existing homes will be flat due to headwinds including declining affordability, limited inventory and tight mortgage lending standards.
Sales of existing homes have grown by cumulative total of 20 percent during the past two years, and prices are up 18 percent, said NAR Chief Economist Lawrence Yun. But incomes have risen only 2 to 4 percent over the same time, which makes homes less affordable. Although affordability is at a five-year low, that’s still the fifth-best level in the last 40 years, Yun said.
Yun is projecting that when the final numbers for 2013 are in, sales of existing homes will be up 10 percent from last year, to 5.13 million, but will hold steady at 5.12 million next year. Yun expects to see inventory shortages again next spring, as builders need to boost housing starts by 50 percent to meet underlying demand. Source: realtor.org
What College Will Be Like in 2023 - Technology Will Change Delivery But Costs Will Not Go Down
Ten years from now college might not look too different from the outside—the manicured quads, the football games, the parties—but the learning experience students receive will probably be fundamentally different from the one they get today.
Textbooks. Lecture halls. September-to-spring calendars. Over the next decade, technology may sweep away some of the most basic aspects of a university education and usher in a flood of innovations and changes. Look for online classes that let students learn at their own pace, drawing on materials from schools across the country—not just a single professor and a hefty textbook.
All those changes probably won't make a university education cheaper—alas—but they will likely upend our perceptions about how we value it. Traditionally, schools have been judged by how many prospective students they turn away, not by how many competent graduates they churn out.
"Those are status rankings, driven by exclusivity and preservation of an old model," says Michael Crow, the president of Arizona State University. But as new technologies seep into the classroom, it will be easier to measure what students actually learn. That will "make universities more accountable for what they produce," Dr. Crow says.
Here are four areas where you can expect to see major changes and one area where you probably won't:
Severe Inventory Crunches Finally Easing - Not In Boston
The inventory problem that has plagued many parts of the country over the past year is showing signs of improving, according to a new report by realtor.com®. While the number of homes listed for sale nationwide fell slightly in September, many markets also saw an increase in inventory levels as rising home prices gave sellers more incentives to list.
Inventory levels are at their third highest level of the year. Nine of the top 30 metros saw year-over-year increases in their inventory levels. Some housing markets that experienced the largest drops in homes for sale in the past year are starting to see an increase. The following metros have seen some of the largest year-over-year increases in inventories:
- Los Angeles: +25.2%
- Sacramento, Calif.: +20.9%
- Atlanta: +14.4%
- Orange County, Calif.: +14.3%
- Orlando: +12.5%
- Phoenix: +7.7%
However, inventory levels still remain far below year ago levels in the following areas:
- Detroit: -19.6%
- Boston: -16%
- Denver: -15.4%
Realtor.com®’s figures cover sale listings for more than 800 MLS’ nationwide, but they do not cover new-home construction or “for sale by owner” listings.
On Monday, the National Association of REALTORS® reported year-over-year gains in unsold home inventories for the first time in more than two-and-a-half years. NAR reported the housing inventory nationwide was 2.21 million in September, up from 1.8 percent compared to year ago levels.
Source: “Report: Housing Inventory Fell in September,” The Wall Street Journal (Oct. 24, 2013)
September home prices fell 1.9% to a 5.29 million annual rate from September 2012 and home prices rose 11.7% which was the 10th straight year-over-year double digits price increase. Inventory rose to 5 months from 4.9 months.
Existing-home sales dropped in September amid reduced home affordability, as prices continued to rise on an annual basis, the National Association of Realtors (NAR) reported.
“Affordability has fallen to a five-year low as home price increases easily outpaced income growth,” said Lawrence Yun, chief economist at NAR. “Expected rising mortgage interest rates will further lower affordability in upcoming months. Next month we may see some delays associated with the government shutdown.”
Existing-home sales declined 1.9 percent to a seasonally adjusted annual rate of 5.29 million in September from a downwardly revised 5.39 million in August, according to NAR.
Housing inventory in September remained flat at 2.21 million for-sale existing homes, representing a 5-month supply of homes at the current rate of home sales, NAR said. That’s up slightly from a 4.9-month supply in August but down from a 5.4-month supply a year before, according to the trade group.
Home prices, meanwhile, posted their 10th straight year-over-year increase in the double digits, according to NAR. They were reportedly up 11.7 percent compared to September 2012.