Harvard’s Joint Center on Housing Studies (JCHS) recently published its annual The State of The Nation’s Housing 2024 Report, which has a three interesting findings for investors to consider:
Finding #1 - Cost of Homeownership Highest in More Than 30 Years
The all-in monthly costs of the median-priced home in the US are the highest since these data were first collected more than 30 years ago, at fully $3,096 after taxes and insurance and assuming a 3.5 percent downpayment
In the first quarter of 2024, a household needed to earn a whopping $120,000 annually to afford the median-priced home in the US, up from an inflation-adjusted $82,000 in the first quarter of 2021
Finding #2 - Household Growth Driven by Millennial Homeowners and Gen Z Renters
Household growth remained strong in 2023, despite headwinds from high housing costs. There were 1.7 million households added on net in 2023, down slightly from the 1.9 million new households in 2022, surpassing typical levels of growth from the past decade. This growth was largely driven by millennial homeowner households and Gen Z renter households
Immigration levels spiked to 2.6 million people in 2022 and 3.3 million people in 2023. This greatly exceeded stagnant levels of natural population change and lifted total population growth to much higher levels than those seen in the past decade
Finding #3 - Home Prices Continue to Rise as For-Sale Inventory Hits Lowest Level in 30 Years
After a brief decline through early 2023, home prices resumed rising nationally and were up 6.4 percent year over year by February 2024. Nationwide, home prices have jumped a shocking 47 percent since early 2020 and 115 percent since 2010.
In March 2024, only 1.11 million homes were available for purchase, down 34 percent from the same month in 2019 (Figure 8). Inventory was down in 94 of the 100 largest metros in the first quarter of 2024 relative to the same period in 2019 and the average decline was 42 percent.
Multifamily starts fell 14 percent to 472,300 units last year, and the decline has only accelerated, with the seasonally adjusted annualized rate of multifamily starts dropping to a 343,000 unit average in the first quarter of 2024. Despite declining starts, the multifamily stock continued to grow in 2023. Indeed, 449,900 new multifamily units hit the market last year, a 22 percent increase from the previous year and the highest number of completions in more than three decades
Rent growth has softened considerably. In the professionally managed apartment sector, asking rents rose just 0.2 percent year over year in the first quarter of 2024, a steep drop from the 4.5 percent rate recorded a year earlier and the record-high 15.3 percent seen in the first quarter of 2022. Despite the slowdown, asking rents were 26 percent higher than in early 2020
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