The Harvard Joint Center for Housing Studies (JCHS) has released its State of the Nation's Housing 2022 report, highlighting the housing affordability challenges ahead, following a year of rising housing costs and demand.
According to the report, home price appreciation was 20.6% in March 2022, while rents rose 12% in the first quarter of 2022 — with rents in some metros increasing more than 20%. These increases have created additional hurdles to first-time and middle-income buyers to purchase a home, especially amid rising costs for other necessities such as food and gas.
"At today's prices, the typical downpayment that a first-time buyer would need for a median-priced home is $27,400," Alexander Hermann, a JCHS senior research analyst, said in a press release. "Without help from family or other sources, this would rule out 92% of renters, whose median savings are just $1,500."
Other key findings include:
- Recent interest rate hikes amount to a 27% jump in home prices for monthly mortgage payments, which have increased by more than $600 a month on a median-price home.
- The greatest homeownership increases occurred in the under-45 age group, as millennials were able to capitalize on strong income gains and low employment to achieve stronger financial footing.
- Rapidly rising home prices have increased the wealth gap between home owners and renters, with home owners cashing out $275 billion in equity in 2021 — the highest level since 2005.
Supply-chain constraints have left some 1.64 million new homes still under construction — the highest level since 1973. The State of the Nation report notes the increase in starts for single-family and multifamily construction in 2021 may help slow rising housing prices and rents; however, data recently reported by NAHB indicates housing starts are slowing in 2022.
NAHB Chief Economist Robert Dietz noted in a recent Eye on Housing post that there are now 822,000 single-family homes and 843,000 apartments under construction — a 24% year-over-year increase in total housing units now under construction.
“ The number of units under construction is rising on both the total volume of construction, as well as longer construction times," Dietz concluded. "However, it appears the number of single-family units in the construction pipeline is now peaking for this business cycle.”
Visit the JCHS website to see more, including the full report and interactive data tables.