In spite of relatively low housing prices and near-record low mortgage rates, many people in the United States still can’t afford to buy a new home. According to the Center for Housing Policy, the income needed to buy a median-priced home dropped in 93% of the 200 housing markets they studied. Unfortunately for the would-be homebuyers, that still was too high a barrier for them.
The Center further reports that in response to these conditions, more people are choosing to rent homes. However, in 89% of those same markets, the demand has driven up the home-rental costs. The greatest contrast was found in Florida, where in 12 markets the income needed to buy a median-priced home dropped 20% at the same time the average rent for a two-bedroom home rose by 6%.
With foreclosures still near record levels and even rental homes becoming unaffordable, many people are turning to multifamily homes. This is causing some housing experts to warn Congress that help may be needed to insure funding is available to create additional units. Recently, Bob DeWitt, CEO of GID Investment Advisers, testified to Congress on behalf of the National Multi Housing Council (NMHC), that government support is needed for the apartment industry. He warned lawmakers not to create a capital shortage for the lower-income sector as they consider ways to reduce taxpayer exposure to the secondary market.
He noted that housing expert Professor Arthur Nelson of the University of Utah projects that “half of all housing built over the next 10 years will need to be rental housing to meet the dramatically changing landscape of demand.”
This is further evidence that now is a good time for multifamily developers to start doing their due diligence on location and funding.
- Study: Many workers facing high housing costs (seattletimes.nwsource.com)
- 1 in 5 households struggle with home costs (cbc.ca)
- Housing and the “New Economy” (feldmanfile.blogspot.com)