Recently, at the National Press Club in Washington, DC, we released our 30th anniversary State of the Nation’s Housing report. The milestone event included a panel discussion where I was joined by three speakers who not only have important perspectives on housing but also have longstanding ties to both the report and the Joint Center: Eric Belsky, a former Joint Center Managing Director who is now Director of the Federal Reserve’s Division of Consumer and Community Affairs; former HUD Secretary and former OMB Director Shaun Donovan (who was once a student intern at the Center!); and George McCarthy, President and CEO of the Lincoln Institute of Land Policy, who formerly directed Metropolitan Opportunity at the Ford Foundation, a longtime funder of the report. Alana Semuels, staff writer for The Atlantic, moderated our conversation.
In his remarks kicking off the event, my colleague Daniel McCue, a senior research associate at the Center who has overseen the report’s production for nearly a decade, noted that while some conditions have improved since our first State of the Nation’s Housing report was released in 1988, others have not. On the positive side, over the past three decades more than 40 million units have been built, accommodating 27 million new households, replacing older homes, and improving the quality of the nation’s housing stock. Over the same period, however, the number of Americans burdened by housing costs rose by nearly 14 million households, including 8 million more renters paying more than half their income for housing. Homeownership rates have also fallen by at least 6 percentage points among all households under age 55, while the gap between black and white homeownership rates widened.
Looking forward, McCue noted that while we anticipate continued growth of about 1.2 million households a year over the next decade, representing solid growth in housing demand. With slower rates of natural increase in population, foreign immigration will account for an increasing share of this growth, and so future trends in immigration will be a key driver of the overall housing market.
McCue also pointed to long term trends in falling interest rates as a key counterweight to rising real home prices over the last few decades, which has kept the monthly cost of owning a home within reach of many households nationwide. However, in many areas of the country home price gains have greatly outpaced growth in incomes, making it ever more challenging to save for downpayments. McCue also said pointed to recent and projected rises in interest rates as a factor that could significantly affect affordability in the coming years.
In our wide-ranging discussion that followed McCue’s overview, my fellow panelists covered a host of key issues. Donovan, who recalled that his interest in housing came out of the work he did as a graduate student researcher at the Joint Center under William Apgar, added that, “we can’t address housing affordability without tackling land use and zoning.” He also pointed out that productivity in construction has actually gone down in recent decades but added, “there are things happening that could produce 40 to 50 percent reductions” in the cost of building new homes.
In his comments, McCarthy raised the question of whether foreign investment is good for U.S. housing markets and whether more regulation and greater use of innovative models, such as shared-equity housing, was needed to get housing costs under control. While not weighing in on these ideas, Belsky warned that affordability issues need to be addressed because “excessive housing costs often result in people not saving for retirement and for emergencies.”
The event, which you can watch above, also included welcome remarks from Don Chen, director of Just Cities and Regions at the Ford Foundation, a longtime funder of the report.