Home price appreciation rates are pretty disparate across the nation, according to the State of the Nation’s Housing report  issued by the Joint Center for Housing Studies of Harvard  on Friday. In fact, while 16 percent of U.S. markets saw housing prices jump 40 percent since the year 2000, another 30 percent of cities actually saw prices decline over the same period.
According to the Center, this is causing an ever-widening gap between the country’s priciest and most affordable cities.
“Longer-term gains in real prices varied widely across the country, with some markets experiencing home price appreciation of more than 50 percent since 2000, while others posted only modest gains or even declines,” the Center reported. “These differences have added to the already substantial gap between home prices in the nation’s most and least expensive housing markets.”
Nominally, prices rose in 97 out of the nation’s 100 biggest metro areas last year. The steep uptick is a result of both increasing demand and ever-tightening housing supply, according to Chris Herbert, Managing Director for the Joint Center for Housing Studies. Housing starts just haven’t been able to keep up.
“While the recovery in home prices reflects a welcome pickup in demand, it is also being driven by very tight supply,” Herbert said. “Any excess housing that may have been built during the boom years has been absorbed, and a stronger supply response is going to be needed to keep pace with demand—particularly for moderately priced homes.”
According to Mark Fleming, Chief Economist at First American , the lack of supply is “one of the most pressing challenges in the housing market today.”
“Since 2009, new housing supply has been falling short of new housing demand,” Fleming said. “Currently, I estimate that the amount of housing supply necessary to just keep pace with demand is probably around 1.5 million housing units a year.”
The report found that housing starts hit just 1.17 million last year—a jump of 5.6 percent, but still well below Fleming’s 1.5 million goal.
But despite short supply and ever-rising prices, many Americans are still venturing into homeownership. According to Daniel McCue, Senior Research Associate at the Center, the country’s long-declining homeownership rate appears to be leveling off.
“Although the homeownership rate did edge down again in 2016, the decline was the smallest in years,” McCue said. “We may be finding the bottom.”
Whether or not that happens will depend on affordability, which the Center’s report shows is on the downslope. According to the report, about 19 million U.S. households spent more than half of their annual incomes on housing in 2015.