Dive Brief:
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A steady rise in housing demand, home prices and construction activity, along with a decline in the number of distressed homeowners, sees the U.S. housing market returning to normal, according to the 2017 State of the Nation's Housing report from the Joint Center for Housing Studies of Harvard University.
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However, limited supplies of for-sale and rental properties are available to address the growing demand, pushing up home prices. Nearly 19 million homeowners spent more than half of their incomes on housing in 2015. Home prices were up in 97 of the country's 100 largest metros last year. Since 2000, some markets have seen price growth of more than 50%.
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Even though the housing market has been on the rebound for the last seven years, it has added less new housing in the past 10 years than it has during any other decade-long period since the 1970s, with progress in the mid-priced single-family sector being particularly slow.
Dive Insight:
While markets in states like New York and California are coming up short when it comes to housing production, others are starting to respond to demand. Comparing population increases in the 10 fastest-growing U.S. cities with the number of people those cities' new residential units can house, CityLab found Phoenix, Dallas, Fort Worth, TX, and Houston among the cities making strides toward growing their housing stock.
Still, the growing gap between household incomes and home-price growth has been one of the main drivers of declining housing affordability for middle-income earners and an overall drag on homeownership. Since 2012, incomes have grown 1.6% compared to 26% for home prices across the country's 30 largest metros, according to Redfin.
In those metros, households earning the area median income could afford 44% of for-sale homes in 2012 — in 2016, that number sunk to 32%. Earners in that income bracket may be priced out of some markets entirely, such as Seattle and the San Francisco Bay Area, where market-rate housing is out of reach and many workers earn too much to be eligible for subsidized housing.
Smaller markets, like Bismarck, ND, and Billings, MT, could be the key for middle-income households in search of affordable owned housing. Both markets were ranked by SmartAsset as best for those earning $55,000 a year, accounting for each area's amenities, commute times, employment prospects and housing costs. Both, too, were also included by SmartAsset among the nation's most stable housing markets based on home-price growth relative to their potential for value depreciation within 10 years of purchase.