CAMBRIDGE, MA — As the U.S. economy continues to recover from the impact of the COVID-19 pandemic, households that weathered the public-health crisis without financial distress are snapping up the limited supply of homes for sale, pushing up prices and further excluding less affluent buyers from homeownership. At the same time, millions of people who lost income are behind on housing payments and on the brink of eviction or foreclosure.
Those are among the key findings of The State of the Nation’s Housing 2021, a major new report which concludes that, while government policymakers “have taken bold steps to prop up consumers and the economy, additional government support will be necessary to ensure that all households benefit from the expanding economy.”
The State of the Nation’s Housing 2021 report, released last month by the Harvard Joint Center for Housing Studies, found that even before the pandemic, household growth in the suburbs and small metros was on the rise, and the pandemic helped accelerate that growth, particularly among younger households who were ready to own homes and were looking to work remotely.
In 2020, existing home sales rose 6% and new single-family home sales jumped 20%, putting total home sales at their highest level since 2006, despite historically tight supply. But the combination of robust demand and limited supply lifted home prices to their fastest pace in over a decade.
“These outsized increases have raised concerns that a home price bubble is emerging,” said Daniel McCue, a senior research associate at the Cambridge, MA-based Harvard Joint Center for Housing Studies. “But conditions today are quite different from the early 2000s, particularly in terms of credit availability. The current climb in prices instead reflects strong demand amid tight supply, aided by record-low interest rates.”
“For those households with secure employment and good-quality housing, their homes provided a safe haven from the pandemic,” said Chris Herbert, managing director of the Joint Center. “But for millions struggling to cover the rent or mortgage, their housing situations have become increasingly insecure, and these disparities are likely to persist even as the economy recovers, with many lower-income households slow to regain their financial footing.
“Policymakers must be attuned to the needs of those who have fallen even further behind, ensuring that they also benefit from the expanding economy,” Herbert said.
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