In the Media

A new Harvard study confirms what most Californians can plainly see: housing is getting increasingly unaffordable in the Golden State, despite more people leaving. In their 2023 State of the Nation’s Housing report, researchers with Harvard University’s Joint Center for Housing Studies note that the market for both for-sale and rental houses has cooled, though homeowners and renters face costs above pre-pandemic levels.

Naturally occurring affordable housing is basically cheap enough for low-income people to afford it without a government subsidy. “These tend to be older units, units in some cases that might not be particularly desirable in terms of the location or the kind of amenity value of those units,” explained Alex Hermann, a housing researcher at Harvard.

“There’s a larger number of existing mortgage holders with record-low interest rates. So if you have a mortgage with an interest rate in threes or low fours, you’re less inclined to take on mortgages with rates in the sixes today,” Alexander Hermann, a research associate at Harvard’s Joint Center for Housing Studies, which recently released a report on the state of the nation’s housing, said.

The decline in home buyers wishing to renovate hasn’t put a dent in overall spending on remodeling. In fact, the market for homeowner improvement and repair projects in the U.S. is projected to reach $484 billion in 2023, up from $471 billion last year and $328 billion in 2019, according to Harvard University’s Joint Center for Housing Studies.

Harvard’s Joint Center for Housing Studies in its annual State of the Nation’s Housing report released 21 June estimates that 2.4 million potential homebuyers have been priced out of buying a home with rising costs.

A lot of local governments also have strict zoning laws and regulatory barriers that make it hard for developers to build, especially lower-cost, high-density housing, according to Chris Herbert, managing director at the Joint Center for Housing Studies at Harvard University.

First-time homebuyers and people of color have been particularly affected by higher home prices and mortgage interest rates, according to the Joint Center for Housing Studies of Harvard University’s annual State of the Nation’s Housing report.

“If you give everyone demand-side subsidies, like vouchers, and there’s a supply shortage, it’s going to drive up prices,” Chris Herbert, the managing director of Harvard’s Joint Center for Housing Studies, told me. It costs the state more, and landlords often wind up pocketing the profits.

Spending on home renovations is expected to slow this year because of factors such as declining home sales and values, rising interest rates, continuing inflation and rumblings of a coming recession, says Abbe Will, senior research associate with Harvard University’s Joint Center for Housing Studies.

“If you look at rental vacancy rates, they’re extremely low,” said Whitney Airgood-Obrycki, a senior research associate at the Joint Center for Housing Studies at Harvard University. “It’s really hard for people to find an affordable place to move to. It’s extremely tight, especially for low-income renters.”