On the opposite end of the scale, millions of homeowners and renters who lost income because of the pandemic are behind on their housing payments and face potential eviction or foreclosure.
Some of the findings of the report include:
· Home sales rose to their highest level in 2020 since 2006. Existing-home sales rose 6 percent over 2019, and new single-family home sales rose 20 percent. Household growth was strongest in the suburbs and smaller cities, continuing a pattern started before the coronavirus pandemic as young households started to become homeowners. The shortage of homes was so pronounced that in late 2020 there was less than two months’ supply for the first time, and homes sold in a median of 18 days.
· High prices don’t indicate a bubble. Despite rapid price increases, which are well-above income growth, the researchers found that tight credit means homeowners are well-qualified to buy their homes. Rising prices come from strong demand, tight supply and low interest rates rather than the loose credit that created problems during the 2006-08 housing crisis.
· The race gap persists in homeownership. While the Black-White homeownership gap improved during the first quarter of 2021 to 28.1 percent over the 30.8 percent gap in 2019, the disparity between races is still large. Income inequality is a factor in the gap, with the median income of White households ($71,000) approximately 65 percent higher than that of Black households ($43,000) and nearly 30 percent higher than Hispanic households ($55,000).
· Housing affordability continues to challenge renters. More than 80 percent of renters earning less than $25,000 spent more than 30 percent of their income for housing, and the majority spent more than half their income on housing. Nearly 50 percent of renters earning between $35,000 and $49,999 also spent more than 30 percent of their income on their housing costs.
· Eviction and foreclosure risks. Approximately 14 percent of all renter households were behind on their rent in early 2021. While just 11 percent of White renters were behind on their rent, 29 percent of Black renters, 21 percent of Hispanic renters and 18 percent of Asian renters were behind. While rental assistance and eviction moratoriums have kept people in their homes so far, there is a risk of widespread evictions if assistance is not available before the moratoriums end. In addition, approximately 2.3 million homeowners are still in forbearance on their mortgages.
The loss of family members and financial disruption of the pandemic are likely to impact the housing market for several years. Harvard’s researchers recommend that policymakers continue to address these issues and to help those who have fallen behind because of the pandemic.
The report is available at https://www.jchs.harvard.edu/state-nations-housing-2021-embargo
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