Housing recovery in full sail -- but only lifeboats afloat for some
After being battered by the economic storm and nearly sinking to the bottom of the sea, the housing market has finally returned to full sail. The median home price in March 2013 was up 11.6 percent over last year. Existing home sales increased 9.44 percent, the largest gain since 2003-04. And new home sales are up for the first time in seven years, posting a 20 percent increase since their historic low in 2011.
Low inventories and increased sales have collided to help boost home prices. Additionally, people seem to be staying in their homes longer. Half a million fewer existing homes entered the market in 2013 compared to last year -- the lowest level since 2001.
Housing construction is still at historically low levels but is showing signs of improving as the inventory tightens.
If the weather holds, we'll be just fine. But as the wind fills our sails and the market breezes through recovery, many homeowners are left behind in the lifeboat. According to the Harvard Joint Center for Housing Studies (JCHS), millions of homeowners are delinquent on their mortgages or owe more than their homes are worth.
Owning a home is the most affordable it has been since the 1970s. But tight credit markets are limiting the ability of first time homebuyers from entering the market. So, despite overall very good news, the national home ownership rate has fallen for eight consecutive years.
The slide in homeownership is particularly pronounced in minority communities. Homeownership declined among African-Americans by almost 6 percent and among Hispanics by 3.3 percent. Foreclosures in low income neighborhoods have abetted the spread of blight making it difficult for governments and others to invest in these areas.
The JSHS report commendably stresses that homes play a vital role in the health and well-being of the nation's households and communities. Therefore, it is important that we create public policies that address the long-term structural challenges of equity and fairness in our housing market.
They say rising tides lift all ships. But if you're ship has a hole in it, more water isn't going to help.
Summary of the JCHS "State of the Nation's Housing 2013" report