After three consecutive years of record-low construction levels, the vigor of the recovery in housing now hinges on a return of demand, the study notes, adding that the lingering consequences of the recession and financial crisis are thwarting a broader recovery.
“While the sharp declines in both home prices and interest rates have left homes in many places more affordable than they have been in decades, stubbornly high unemployment and tightened lending standards have limited the ability of many first-time buyers to capitalize on the situation,” said Eric Belsky, managing director of the Joint Center for Housing Studies.
“The state of the nation’s housing is sobering,” Belsky continued. “Total housing construction over the previous decade now barely exceeds the lowest level of any 10-year period in records dating back to 1974, but vacancies remain elevated because the recession has driven demand down so sharply.”
While there are no convincing signs yet of a broad turnaround in housing, the report points out that the market could turn quickly as evidenced by the healthy boost in both home sales and prices brought about by the 2010 homebuyer tax credit.
The report highlights how growth in both younger and older households over the coming decade should continue to lift the demand for rental housing, as well as for smaller homes. The report also calls attention to the continuing housing affordability challenges facing the nation.