Harvard's Joint Center for Housing studies "State of the Nation's Housing" report, released on June 13, predicted that even though home-price growth will fall to more moderate levels in many areas, sharp drops in prices are unlikely. The absence of severe overbuilding or big job losses in major metropolitan areas is an important factor in the stability, the report said.
Findings:
•Between 2001 and 2004, the number of households spending more than half their incomes on housing increased by 14 percent to 15.8 million.
•A renewal of rental demand was seen in all four regions of the country last year. Rental vacancy rates fell from 10.2 percent to 9.9 percent in 2005.
•Adjustable rate mortgages shares fell from 35 percent in 2004 to 31 percent in 2005. Interest-only loans rose to 20 percent of loan originations in 2005. Subprime originations increased in real terms to $625 billion in 2005 from $210 billion in 2001; more than one in 10 mortgage holders is a subprime borrower.
•House prices increased 9.4 percent in 2005, after adjusting for inflation. Of the 149 largest metropolitan areas in the country, the number in which median house prices are at least four times the median household incomes increased from 13 in 2001 to 49 in 2005.
•Minorities accounted for 63 percent of household growth from 1995 to 2005. They are projected to account for 71 percent of household growth from 2005 to 2015, which would put the minority share of all households from 28 percent today to 33 percent in 2015.
•The bottom three-quarters of the income distribution is seeing slow wage growth that isn't keeping pace with rising housing costs.
•The supply of rentals affordable on a $16,000 annual income fell by 1.2 million between 1993 and 2003.