"The current housing expansion is the longest in at least a half century, with a record increase of seven million homeowners over the past five years," says Nicolas P. Retsinas, Director of the Joint Center. "But house price increases now rival those experienced during the 1980s, and interest rates are well over a point higher than last year, making it difficult to sustain growth." The Joint Center also finds that rents have been rising faster than inflation over the past three years, especially in the West and Northeast.

"House price inflation has dampened affordability, but it has also driven up the value of homeowners’ equity," adds Retsinas. "The value of primary residences climbed 20 percent between 1995 and 1998, and, even though stocks have surpassed home equity as a share of total household wealth, 59 percent of homeowners with stock holdings still have more equity in their homes than in stocks."

"Booming housing markets have also added over 16 million units to the nation’s housing stock this decade," Eric Belsky, Executive Director of the Joint Center, points out. "Indeed 23 metropolitan areas, including Atlanta, Charlotte, Las Vegas, and Phoenix, added 25 percent or more to their housing stocks between 1990 and 1998. Most of these new homes have been built outside central cities, at the low-density fringe of metropolitan areas where employment growth has been fastest. As jobs in all sectors continue to decentralize, people are able to work and live further from the urban core, fueling increased concerns about sprawl." While large cities in the South and West continue to grow, most in the Northeast and Midwest are losing households to the suburbs, and affluent households are most likely to move out. Absent foreign immigration, many more larger cities would be showing population declines

Surging housing markets have put added pressure on home prices and rents, making homeownership a bigger challenge and increasing the shares of lower income renters with high housing cost burdens. "Mortgage industry innovation and outreach to low-income and minority borrowers have helped to extend homeownership opportunities to many," notes Retsinas, "but, while minorities contributed almost 40 percent of the net growth in homeowners over the past five years, the gap between white and minority ownership rates has barely narrowed."

Furthermore, over 5 million renters with very low incomes spend more than half their incomes on housing, and working has proven to be no panacea for high housing cost burdens. "Subsidized housing also faces challenges," concludes Belsky. "As of 1999, over 90,000 federally subsidized, privately owned apartments were lost as owners chose to opt out of subsidy programs or prepay their subsidized mortgages. Although HUD is working to protect tenants and negotiate new subsidy contracts, 10-15 percent of the remaining project-based assisted units could be at risk of loss over the next few years. Meanwhile, demolition of some public housing is eliminating many badly deteriorated units, but without one-for-one replacement. And construction of affordable units financed through tax credits has slowed steadily.

The research report was released today at the Ford Foundation headquarters in New York.

Additional support for this study was provided by the Policy Advisory Board of the Joint Center for Housing Studies, the Fannie Mae Foundation, the Federal Home Loan Banks, Freddie Mac, the Housing Assistance Council, the Mortgage Bankers Association of America, the National Association of Housing and Redevelopment Officials, the National Association of Local Housing Finance Agencies, the National Association of Realtors, the National Council of State Housing Agencies, the National Housing Endowment, the National Low Income Housing Coalition, the National Multi Housing Council, and the Research Institute for Housing America.

The Joint Center for Housing Studies of Harvard University is the nation’s leading center for information and research on housing in the United States. The Joint Center analyzes the dynamic relationships between housing policy and practices and economic, demographic, and social trends, providing leaders in government, business, and the non-profit sector with the knowledge and tools needed to develop effective policies and strategies. Established in 1959, the Joint Center is a collaborative unit affiliated with the Harvard Design School and the Kennedy School of Government. Nicolas P. Retsinas has served as Director of the Joint Center for Housing Studies since 1998. Mr. Retsinas was previously Assistant Secretary for Housing-Federal Housing Commissioner at the U.S. Department of Housing and Urban Development.

EDITORIAL NOTES:

Presentation and Press Conference in New York: The State of the Nation’s Housing: 2000 will be presented and discussed Tuesday, June 27, beginning at 11:00 AM at the Ford Foundation,
^{320 East 43rd Street, New York, NY.}