Eye On
Housing
T
Policy Recommendations
The increasing number of senior house-
holds also increases the urgency to develop
policies that allow seniors to stay in their
homes as they age, Goodman explained.
“This includes encouraging home
modifications that reduce the number
of debilitating trip and fall injuries,” she
noted. “It also includes changes in zoning
laws to allow for house sharing and the
construction of accessory apartments.”
he housing market is poised for a
big change over the next 15 years.
The data shows some alarming
trends: A housing market that has over-
corrected itself in the aftermath of the
housing bubble, a nation in the midst of
a rental affordability crisis, and an entire
generation that likely is headed for a severe
housing shortage. Laurie Goodman, director
of the Housing
Finance Policy
Center at the Urban
Institute, leads a team to
investigate these pressing
issues facing the housing
industry and uses a trail of
data to find answers.
Generational
Concerns
On the Rental Market
An affordability crisis is brewing in the
rental market.
Each age group seems to
have its own set of concerns
when it comes to the future of housing,
as generational challenges of the future
increasingly creep into real estate talks.
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22
What the Data Shows
Millennials are edging into home ownership
at a slower rate than previous generations,
showing a higher propensity to rent versus
buy. They are also struggling to save enough
for a down payment to one day become
homeowners, according to Goodman.
Baby boomers have their own housing
concerns, possibly facing a severe shortage
in the coming years. The Urban Institute
lately has been looking into baby boomers,
especially since the number of households
over age 65 is projected to surge from 25.8
million in 2010 to 35.4 million in 2020
and then 45.7 million in 2030. In fact, the
largest household increase between 2010
and 2020 will be in the age 65 to 74 age
group (birth years 1946-1955), with a 6.8
million increase expected in the number of
households.
The Challenge Ahead
“As baby boomers age and move onto fixed
incomes, they will be competing with other
groups for increasingly scarce affordable
rental housing,” Goodman said. “Even
those with a mortgage may find mortgage
payments difficult to maintain on their
fixed income.”
GILROY • MORGAN HILL • SAN MARTIN
JULY / AUGUST 2016
What the Data Shows
For decades, the number of new home-
owner households has significantly exceeded
the number of new rental households,
until recently (see sidebar). What’s more,
steep demand is outpacing rental supply
and resulting in skyrocketing rental costs
— rental prices have shot up at least
4 percent for just the past two years alone.
An unprecedented number of families are
paying more than half of their incomes
toward rent. The Urban Institute forecasts
that rental demand will continue to surge
until at least 2030— with affordability
problems in the rental market showing no
signs of fading fast.
The Challenge Ahead
Surging rents is making it difficult for
renters to save enough for a down payment
to transition into home ownership. Also,
the rental shortage is expected to get worse
as the number of new renters continues to
outpace new homeowner households.
Policy Recommendations
“We must increase current annual
production of multifamily units to keep
up with demand,” Goodman said. “Also,
we must ensure that more units are
affordable.” The Urban Institute suggested
that single-family homes turned into
rentals should be considered part of an
affordable housing strategy. This is due to
the sheer volume that already exists, and
the tendency for these units to be more
affordable to low and moderate income
individuals and families.
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