Housing News Roundup: April 17, 2015
Housing Prices Impact Kids of Owners and Renters Differently
Even a small increase in a property’s worth can benefit the children of a homeowner later in life, while negatively impacting the children of a renter, according to a new study in the Journal of Urban Economics. Researchers found that a 1% rise in price in an owned home with a 17-year-old is linked to a 0.9% higher annual income later in life; the same increase in a rented home is linked to a 1.5% lower future income. “If home prices are rising, parents who are homeowners may have additional resources to finance a child’s higher education … On the other hand, the effect of rising house prices for parents who are renters is the opposite. Rising housing prices often mean higher housing costs. Rents go up,” said Maria Jose Luengo-Prado, a senior economist at the Federal Reserve Bank of Boston.
Source: Wall Street Journal
The Problem of Renting in San Francisco
Average monthly rent of $2,802, vacancy rate of 3.6%, and a one-year increase in rental costs of 12.8%. No wonder San Francisco topped Forbes’ list of worst cities for renters. “What makes a market unfavorable for a renter is not just the amount of rent and its relationship to income levels, but the vacancy and availability of units,” said Hessam Nadji, of the real estate investment firm Marcus & Millichap. While the Bay Area cities are expected to add 10,000 new units this year, demand continues to outpace supply.
Federal Homeownership Subsidies Four Times Greater than Assistance for Low-Income Renters
The U.S. government hands out approximately $195 billion each year in homeowner subsidies — mostly to wealthy and middle-class residents — but only spends $46 billion on affordable housing, according to a new working paper from the National Bureau of Economic Research. Each year approximately $40 billion goes to means-tested programs and $6 billion is spent through the Low Income Housing Tax Credit program. In addition, the actual subsidy to homeowners could be as high as $600 billion, after factoring in imputed rent.
Homelessness Costs L.A. $100M Annually
Los Angeles’ lack of certainty on how to address its homeless epidemic is costing the city more than $100 million each year, according to the Office of the City Administrative Officer. In addition to costly arrests, patrols and mental health interventions, librarians, recreation and parks employees, sanitation workers and paramedics also help handle the homeless. “We’re spending more than $100 million to manage the problem,” said City Administrative Officer Miguel A. Santana. “How can we better align the money to address the outcomes we want to achieve?”
Source: Los Angeles Times
Housing Starts Underperform in First Quarter Despite Slight Rise in Single-Family Starts
Housing starts for single-family homes were up slightly while starts for multifamily residences were down in March, contributing to an overall housing market that’s underperformed in the first quarter of 2015. Severe winter weather impacted groundbreakings earlier this year. Recent rebounds in the Northeast and Midwest were countered by a reduction in starts in the South and West. On a brighter note, a Labor Department report found that the number of jobless claims is shrinking as more people find long-term employment.