Wednesday, March 13, 2013

Does the housing market recovery mean greater affordability?

by Janet Viveiros, Center for Housing Policy

When I compare news headlines on the housing market from the last few months to those I read in the beginning of the Great Recession, I am encouraged by glimmers of good news. Even the use of the term “recovery” indicates there is cause for hope. However, the results of a fall 2012 survey I recently read on Long Island residents’ opinions on the local economy and housing post-recession, by Stony Brook University’s Center for Survey Research, gave me pause.

Housing starts are up, but enough to meet demand?
Similar to many places around the country, home values in Long Island steadily decreased during the housing crisis. But as home prices dropped, so did incomes, creating major affordability challenges for homeowners. Long Island renters, like renters across the country, also face declining incomes but without the relief of decreasing housing costs as rents have risen steadily during the housing crisis. It is no surprise that 39 percent of Long Islanders surveyed reported that they spend more than 35 percent of their income on housing costs (30 percent or less of total income is considered affordable). Nearly 6 in 10 Long Islanders surveyed indicated that they were struggling to pay their rent or mortgage. This is up from the 2010 survey of Long Islanders when 5 in 10 of the survey respondents reported having difficulty affording their housing costs. More households in Long Island, like many regions around the country, are struggling with housing costs even as the national housing market begins to see improvements.

This survey is a reminder that, while the housing crisis clearly contributed to worsening housing affordability around the country, improvements in the housing market do not necessarily translate to improved housing affordability. As a matter of fact, in many high-priced markets, a property value recovery coupled with stagnant wage growth and an inadequate supply of new housing has actually hurt affordability. There is still a great deal of work to be done to ensure that all households have access to adequate and affordable housing.

I am encouraged by the conversations surrounding the release of the Bipartisan Policy Center’s Housing Commission report and its recommended reforms to better meet the housing needs of all Americans, particularly seniors and low- and moderate-income families. Hopefully these conversations will lead to action in order to better address issues of housing affordability.

1 comment:

Metropolitan Planning Council Staff said...

Thank you for highlighting this issue--the Metropolitan Planning Council has also been discussing how this is affecting the Chicago region ( Housing affordability in the Chicago region has been deeply hampered by the influx of previous owners seeking to rent, high unemployment, and lack of credit for those who still want to be homeowners. Unfortunately, mortgage relief, loan modification, and deed to lease programs have not relieved pressures on increased rents.

We are working on efforts here--through municipalities and the County-- to begin re-purposing abandoned land. Hopefully this will result in improved housing opportunities.