|Youthful Texas weighs on homeownership||Youthful Texas weighs on homeownership||Wesley Miller||Miller||2018-06-19T05:00:00Z||Economy|
The newest report by Harvard University’s Joint Center for Housing Studies (JCHS) reflects on the evolution of the nation’s housing market over the past 30 years. While the quality of the housing stock improved, serious structural issues developed in the aftermath of the 2007 housing crash, such as the sluggish supply-side response and diverging incomes and home prices. These challenges similarly plague the Texas market and were discussed in a previous blog post, “Housing Bubble’s 10th Burst-Day.”
The JCHS study dives deeper into demographic trends that underlie housing demand. Aging baby boomers helped stabilize the U.S. homeownership rate around 64 percent after a decade-long decline. In fact, the 65-and-older age group was the only cohort with higher homeownership rates relative to 1987. As a result of steady domestic and international migration, Texas’ population mix is younger than the national average (Table 1). While this benefits the state’s economic dynamism, it also weighs on homeownership rates. The Lone Star State continually lags the nation by about 2 percent despite relative housing affordability.
The state’s diverse population presents a similar challenge as racial and ethnic homeownership disparities persist (Table 2). For example, Texans of Hispanic descent represented 31 percent of total housing units, but only 28 percent of those units were owner-occupied in 2016. The gap is even larger for black homeownership and has widened since the Great Recession. These imbalances conflict national consumer surveys on renters, which suggest the desire to own a home transcends racial boundaries.
The impacts of today’s housing hurdles, however, are widespread and stretch to all corners of the market. Rising home prices and rental rates are straining Americans’ budgets and living standards. If left unaddressed, diminishing housing affordability could reverberate through the economy and substantially hinder our well-being. With real income levels stubbornly stagnant, attention is directed toward reducing construction costs. The JCHS suggests improvements in federal policies to protect those most vulnerable while addressing the long-run structural issues. Whatever the solution, action is needed before housing affordability becomes a Texas-sized crisis.