Harvard Reports More Gloom for Housing

Posted by Jim DeBellis on June 7th, 2011

The only thing getting worse press than Anthony Weiner these days is (what else?) the housing market. Harvard’s Joint Center for Housing Studies has just released its State of the Nation’s Housing report, and guess what?  It’s not good.

The study reveals a lot of things we already knew – that the housing crash and subsequent decline of the economy has “…drained household wealth, ruined the credit standing of many borrowers and devastated communities with widespread foreclosures.”  Sweet.

Some of the statistics they revealed are excruciatingly interesting.  For instance, combined home equity has tumbled from $14.9 trillion in early 2006 to just $6.3 trillion near the end of 2010.  And then there are another 15 percent of homes with negative equity, as their mortgage balance exceeds the value of the property. At least it’s comforting to know that, while average Americans lost $8.6 trillion in wealth ($28,000 for every man woman and child in the country) there was a handful of Wall Street sharks and billionaire hedge fund tycoons who made billions on overseeing and orchestrating our demise.

When the report was unveiled, Eric Blesky from Harvard noted that “Total housing construction over the previous decade now barely exceeds the lowest level of any 10-year period in records dating back to 1974.”  Nevertheless, even though new housing isn’t keeping up with population growth, there are still many vacancies because of anemic demand.

New households, which were expanding at a rate of about 1.35 million per year in the 1990s, have been growing at a pace of only a half million or so a year since 2007.  The silver lining, if you can call it that, is that the weak single-family housing market is a good sign for developers of multifamily dwellings and other rental properties.