An ongoing shortage of available housing is proving to be a particularly problematic challenge for first-time home buyers, says a new report issued by the Washington-based Urban Land Institute.
The report, Attainable Housing: Challenges, Perceptions and Solutions, notes that the ongoing pressure due to a lack of housing across the country is driving up prices for nearly all housing.
Result: a traditional lower cost, entry-level product available for decades to first-time buyers is almost disappearing.
Done in conjunction with Los Angeles-based Robert Charles Lesser & Company, the report notes that during the pre-Great Recession years, “the divergence between household incomes and home prices widened dramatically.”
But that widening has only “accelerated in the years since the recovery.”
The report additionally notes that the pace of residential construction has actually “rebounded since the economic downturn, but new housing starts still remain below long-term averages.”
It adds that in many places around the country, “new housing construction is not keeping up with household growth and hosing demand.”
This comes at a time when the multifamily supply is also smaller than usual.
While multifamily permits have increased, those permits have “shifted dramatically from product intended for sale to product intended for rent.”
“Multifamily for-sale housing historically represented about 20 to 25 percent of total multifamily permits, but it has represented 6 to 7 percent in the past eight years.”
In response, the report recommends that developers and builders should begin to focus on the construction of smaller homes, and value housing, among other solutions.
Such smaller homes are generally less than 1,800 square feet, with one and two bedrooms, one bathroom, and one-car garages.
Value housing means a simplified version of traditional housing, with a scaled back emphasis on size, finishes, and structural options.
Says the report: “It is important as ever for the industry to build all types of housing, and especially to find ways to build nonsubsidized housing for middle-class buyers.”
Accelerated construction of such housing will ultimately “relieve current downward pressure on the market that has kept renters from becoming homeowners and that has made housing increasingly unaffordable for Americans at lower income levels.”
By Garry Boulard
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