Affordable Housing Trends

A 2018 Recap, and What to Expect in 2019

The affordable housing landscape in 2018 involved rising housing prices and increased shortages – trends that will likely continue in 2019. In light of the continued challenges, though, there are a number of measures that developers and advocacy groups are taking to improve affordability.

2018 Overview

The Failure of California’s Proposition 10 

In November, California voters rejected a statewide initiative to allow cities and counties to impose rent control. However, supporters of the rejected initiative are working to devise innovative solutions to the affordability issue caused by the State’s rising rents. In particular, some advocates are recommending waiving impact fees for affordable housing projects and offering renters short-term leases.

Rising Home Prices and Increasing Shortages 

Housing costs continued to rise nationwide throughout 2018. In California in particular, the rising costs have been pricing hundreds of citizens out of the housing market. According to one source, in 2018, housing sales trended 4% lower than in previous years, leaving many homes sitting on the market for extended periods of time.

Increasing Rates of Homelessness

Throughout 2018, homelessness was a pervasive issue across the country. In California in particular, the destructive Camp Fire exacerbated the problem. 

According to one source, there is a link between the highest rates of homeless in the nation and the highest housing prices. Homelessness rates were the highest in Washington, D.C., Hawaii, California, and New York, places where affordable housing is scarce. They were the lowest in Iowa and Nebraska, two states with relatively low housing prices.

Innovative Attempts to Address the Housing Crisis

Throughout 2018, various advocacy groups and governments attempted to solve the issue of affordable housing through innovative solutions like tiny house communities, large affordable apartment complexes, and a move to modular construction. There have also been plans in some major metropolitan areas, especially on the West Coast, to construct affordable housing units on public transit lines.

2019 Projections

Rising Interest Rates

Although interest rates fell to a nine-month low at the start of 2019, rates are expected to increase again in 2019, making housing less affordable overall. Researchers with Freddie Mac estimate that the 30-year fixed mortgage rate will increase half a percentage point in 2019.

Rising Home Prices

According to the National Association of Realtors, home prices will rise 2.5% in 2019 to a median price of just over $265,000.

As home prices and mortgage rates rise, more and more buyers may find it difficult to afford a home. However, sales will likely increase in more affordable parts of the country, according to the Chief Economist for Realtor.com. These areas include El Paso, Texas; Tulsa, Oklahoma; and Chattanooga, Tennessee. 

Concerns about affordability are further aggravated by fears of tariff laws impacting the costs of maintaining a home – particularly when it comes to finding and managing sustainable energy sources. In June, China announced that it would not issue approvals for any new solar power installations. Moreover, the U.S. Government imposed tariffs on imported solar cells and modules. One school of thought believes that the United States will adapt to this disruption in the renewable energy industry and will find innovative ways to capitalize on sustainable energy sources. Others, however, fear this will continue to impact affordability.

Continued Housing Shortages 

Researchers with Freddie Mac project continued shortages in affordable homes, as construction trends appear to favor high-end homes over entry-level ones. This is a problem given that the growth in the population and in entry-level jobs demands an increased supply of affordable housing. According to one source, 96% of new construction in urban areas requires household incomes of more than $75,000, but the median income is approximately $60,000, with 62% of renters earning below 80% of that number.

Harmony Communities will closely monitor the affordable housing landscape throughout 2019 and will periodically provide updates on housing availability, pricing, and solutions.

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At Harmony Communities, we feel strongly that each resident has a sense of home. That they come home from work and feel pride in their environment and in their place in the greater community. That families are comfortable raising children in our neighborhoods, and that couples and singles know that they belong to something bigger than their four walls. In other words, we seek to create harmony within each community, making our communities not just passable, but peaceful, safe, functional, and beautiful.