Why are there so many empty bedrooms in U.S. households?

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Inflation rises for the third straight month in troubling sign for mortgage rates link

• Annual inflation hit 2.9% in December 2024, up from 2.7% in November, and overall prices have climbed 20% over the past five years. This rise is expected to keep mortgage rates near 7%, making homebuying more expensive.

• Housing inflation slowed to a 4.6% annual increase, the lowest since January 2022, but still a major driver of overall inflation. Excluding housing, inflation was just 1.9%, below the Fed's 2% target rate.

• Strong job growth and higher borrowing costs are squeezing both homebuyers and builders, with December 2024 seeing 256,000 new jobs. Builders face rising labor and material costs, further dampening the housing market.

The best markets for first-time homebuyers in 2025 link

• The top 10 markets offer affordability, with median listing prices below $200,000 in 5 of the highlighted locations. Rochester, NY, stands out with a median price of $129,900, making monthly payments around $650 with a 10% down payment.

• Economic opportunities in these markets include low unemployment rates and access to state capitals, universities, and industries like finance in Wilmington, DE, and Baltimore, MD. Harrisburg, PA, and North Little Rock, AR, provide strong employment bases near government hubs.

• These areas also boast family-friendly amenities like daycares and grocery stores, but some markets, like Lauderdale Lakes, FL, lag in convenience for young families. Despite trade-offs, projected housing appreciation in all metros highlights strong ROI potential.

2024 property tax balloon causing sticker shock for homeowners link

• Property taxes for single-family homes in the U.S. have risen 5.1% from 2023, with the median payment reaching $3,018. In Florida, property taxes grew by 9.5% annually since 2019, alongside a 14.6% annual rise in home prices.

• Maricopa County, Arizona, saw property taxes increase by 15.4% from pre-pandemic levels, while home prices surged 64.3% since 2019. California counties like Los Angeles and San Bernardino experienced property tax increases of nearly 30% over the same period.

• Rising property taxes are tied directly to escalating home prices, with national tax bills climbing 27% from 2019 to 2024. States like Texas and Florida, which saw significant population influx, reported property tax increases exceeding 30%.

Mexico unveils tax breaks to boost nearshoring and attract foreign investment link

• Mexico plans to cut imports from China and focus on increasing locally made goods, with tax deductions for local and foreign companies through October 2030. Targeted areas include technology and R&D, aiming to raise public and private investment to over 25% of GDP.

• Nearshoring could boost Mexico's GDP by 1.2%, the U.S. by 0.8%, and Canada by 0.2%, according to Finance Minister Rogelio Ramirez de la O. The move emphasizes stronger North American trade ties amid calls for higher tariffs by Donald Trump.

• Logistics and institutional banking sectors are growing, with companies like C.H. Robinson expanding cross-border operations. Bank of America expects to double its Mexico revenue, citing stable nearshoring opportunities.

Yardi Matrix: Multifamily Rents Fall Again in December link

• Average U.S. asking rents decreased by $4 in December 2024 to $1,742, with year-over-year growth at just 0.6%. This marks the 16th consecutive month of rent increases below 1%, while national occupancy rates held steady at 94.7%.

• The Midwest absorbed more units than completed, with 62,000 absorbed versus 51,500 completions, unlike San Antonio and Austin, where supply exceeded demand. Austin saw a large gap, with 21,000 completions and only 12,300 units absorbed.

• Year-over-year rent growth varied, with New York City leading at 5% and Austin experiencing a -5.9% decline. High-growth Sun Belt metros like Raleigh and Atlanta also saw rent decreases, while single-family rental rents dropped $7 to $2,141 in December.

More than one-third of homeowners say they’ll never sell link

• Over 34% of U.S. homeowners state they’ll never sell their homes, with baby boomers leading this trend at 43%. Generational differences show younger owners, like Gen X (34%) and millennials/Gen Z (28%), are less likely to commit to staying put forever.

• Low housing turnover—just 25 of every 1,000 homes sold in the first eight months of 2024—is attributed to rising home costs and fixed low mortgage rates. Housing prices have risen by 40% since the pandemic, and 85% of mortgages now carry rates below 6%.

• Key reasons for staying include homes being fully or nearly paid off (39%), liking their current home (37%), and avoiding high prices in today’s market (30%). Only 8% of homeowners plan to sell within three to five years.

Why are there so many empty bedrooms in U.S. households? link

• In 2023, U.S. households had a record 31.9 million empty bedrooms, a significant increase from just over 4 million in 1970. The share of excess bedrooms among all bedrooms rose from 2.7% in 1970 to 8.8% in 2023.

• Shrinking household sizes have driven this trend, as the average number of people living in American homes has steadily decreased over decades. This has left many homes with more bedrooms than they need.

• Larger metropolitan areas experienced the highest growth in unused bedrooms, reflecting changing family structures and increased remote work, which often repurposes spare rooms as offices or storage spaces.

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Vidit

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