Housing News Roundup: May 22, 2015
Study: Most New Apartments Are Luxury Units
Approximately 82% of multifamily rental units completed between 2012 and 2014 are luxury apartments, commanding rents in the top 20% of the market, according to a new CoStar Group report focused on 54 U.S. metropolitan areas. The trend toward luxury construction may be hurting middle-class and young workers who have few options besides paying more than they can afford. “I don’t believe there ever has been a time where we have produced so much luxury rental housing,” said Susan Wachter, professor of real estate at The Wharton School of the University of Pennsylvania. Due to concerns about an oversupply of luxury units, Atlanta-area developer Mark Randall is planning to diversify his business with middle-income rentals in the suburbs. Researchers, however, point to other side effects. “If cities become places where only the very high-income households can afford to live…that’s going to be a problem for the businesses that want to locate in those cities,” said Ingrid Gould Ellen of the Furman Center at New York University.
The Long Rise in Inflation-Adjusted Rents & Home Prices
The nation’s current affordable housing crisis was a long time coming, according to Wharton real estate economist Todd Sinai, whose new analysis finds the current state of things to be the “manifestation of a long-run trend.” Inflation-adjusted rents have been rising back at least to the 1990s, with a brief reprieve during the recession. Similar patterns hold for home prices. According to Sinai, the answer to the affordable housing crisis may lie in the price-stabilizing power of homeownership rather than increasing the supply of apartments. “Because homeowners lock in their house price at the time of purchase, when rents rise, a homeowner’s annual housing cost is unchanged.”
Twitter Funds a Community Center for Homeless People, Low-Income Residents
Twitter opened the NeighborNest community center in San Francisco’s Tenderloin neighborhood this week, giving homeless and low-income residents a place to improve their job skills, search for housing, access computers and receive child care, while also giving the tech company a payroll tax break for investing in improving the community. The tech giant plans to spend more than $3 million on the community center over the next several years, in addition to giving $3 million to local nonprofits.
The Big Problem of Wealth Inequality
Income inequality in the United States is outpaced by wealth inequality — and both are higher in the U.S. compared with other rich nations, according to a new analysis from the Organization for Economic Cooperation and Development (OECD). The richest 10% of U.S. households earn about 28% of the nation’s income, but hold 76% of its wealth. An accompanying infographic shows differences in wealth among White and Black families. Home equity accounted for an average of $31,118 in wealth for Black households in 2013, compared with $126,064 for White households.
Source: Washington Post