A recently published Harvard study sees the strength and trajectory of the present economy will continue to result in new household formation, which will continue to put demand for housing through 2019 and even into 2020.
In addition, even as homeownership continues to increase the housing inventory shortage will make home purchasing more expensive.
According to the Harvard report, approximately half of all renters today spend more than 30% of their income on rent.
From a homeownership perspective, the total number of renter households is dropping, but there is economic pressure being placed upon those who continue to rent as average rent nationwide rose 3.6% over the last year.
Low vacancy rates continue to allow landlords to raise rent where demand is high.
There is also a trend that was seen in the Harvard report showing that high-income rentals on the rise, which has been a trend for the last eight years.
The report indicates that between 2017 and 2018, 310,000 new high-income renters entered the market.
An interesting metric was discovered that in 2018, 29% of newly-completed multi-family housing units were renting apartments for more than $2,050, especially in the Northeast.
Another concerning finding is that low-cost rentals are on the decrease, with 17% less low-income rentals then in 2011.
Other factors making housing more expensive as covered in other Counsellors Title blog posts are the rising costs of materials and the skilled labor. Add to the already complicated real estate market is the scarcity of buildable lots.
According to the Harvard study, residential land has increased by 80% in the US over the last 10 years. This is causing single family homes to climb in price from $159,800 in 2012 to $203,200 in 2017.Some of the states which have seen historic surgeons in land appreciation are:
Nevada +158%
Colorado +96%
California +88%
Arizona + 81%.
This has filtered down to a higher overall cost in homeownership: with housing prices rising 41% between 2011 in 2018. This may sound like a lot but it’s still is 2% less than the average home price at the peak of 2006.
The good news for the housing market is that household formation continues to provide a stabilizing force with 1.2 million new households per year being formed for the last 3 years.
If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.
Counsellors Title Agency, www.counsellorstitle.net, founded in 1996, is one of New Jersey’s most respected title agencies, serving all 21 New Jersey counties with title insurance, clearing title, escrow, tidelands searches, and closing and settlement services for commercial or industrial properties, waterfront properties and marinas, condominiums, townhouses or residential single family homes. Counsellors Title also features its own Attorney Settlement Assistance Program™ [ASAP], which is an individual resource customized to fit the needs specifically of real estate attorneys, including, Documentation, Preparation, Disbursement of Funds, Attendance at Closing, HUD Preparation or Post-Closing Matters.
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