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June 21,1999 – The Joint Center for Housing Studies of Harvard University, the nation’s leading center for information and research on housing in the United States, today released its annual report, The State of the Nation’s Housing: 1999, revealing that housing had another record-setting year in 1998 and is poised to continue this trend in 1999. Spurred by the lowest mortgage interest and unemployment rates since the 1960s, homeownership rates, home sales, and the value of residential construction all soared to new heights. The rising tide has helped lift many boats, with all ages, family types, and racial and ethnic groups posting solid homeownership gains. But the strength of the housing boom has also kindled concerns ranging from the pattern and pace of development, to escalating rents and house prices, to the challenges the young and working poor face in finding affordable housing. These are the principal findings of the Ford Foundation-sponsored study.
"Home building has accelerated to an average annual rate of 1.8 million since 1996 and we are well on track to build 16 million housing units in the 1990s," says Nicolas P. Retsinas, Director of the Joint Center. "With 8 metropolitan areas each adding more than 200,000 homes and 21 adding more than 100,000 homes from 1990 to 1997 it is small wonder that concerns over urban sprawl are mounting." Indeed, the Joint Center finds that most new construction is occurring in medium and lower-density counties at the metropolitan fringe and beyond.
"Not only has home building had an unusually long and strong run, homeownership rates are up across the board," adds Retsinas. "Just since 1994, more than 5 million homeowners have been added. Minorities have been doing especially well and account now for nearly one-third of first-time homebuyers, up from about one-fifth in 1985. With the minority share of the population expected to increase significantly through immigration, that share will likely edge even higher."
"Even with these advances," Eric Belsky, Executive Director of the Joint Center, points out, "homeownership rates among minorities still lag those of whites by a substantial margin. While a college degree dramatically improves the chances that a minority household will buy a home, few African Americans and Latinos have college degrees. Worse, even those minorities who do have bachelor’s degrees only achieve homeownership rates equal to whites with only a high-school education."
While the enduring strength of the economy has reversed 1980s declines in homeownership rates, it has also resulted in escalating rents and house prices. "Now that house prices and rents have been rising faster than inflation," says Belsky, "many renters are caught in a bind. On the one hand, it has become harder for them to save enough to buy a home and the other hand it has grown harder for them to afford the homes they rent.
Already, more than 5 million renters with very low incomes spend more than half their incomes on housing. With their incomes growing more slowly than their rents, that number will likely rise."
"The working poor face serious housing challenges," notes Retsinas. "Even working full-time at $7 per hour leaves a single parent with too little money to afford even a modest rental. In fact, in eight states they would have to work two full-time jobs just to reduce the cost of their housing to 30 percent of their income."
"Problems are also looming in subsidized housing," concludes Belsky. "For the first time in more than a generation, the number of federally subsidized housing units fell in 1995. Moreover, there are 65,000 fewer units under subsidy today than in 1995. Subsidy contracts on about 1 million units will expire over the next five years and some property owners will undoubtedly opt not to renew so that they can take advantage of rising rents in the private market. Tens of thousands of low-income renters will be forced to choose between covering rent hikes they cannot afford or searching for affordable units in properties that accept ‘portable’ housing subsidies."
The research report was released today at the National Press Club at the first annual Conference on Housing Opportunity, sponsored by the Research Institute for Housing America (RIHA).
Additional support for this study was provided by the Policy Advisory Board of the Joint Center for Housing Studies, the Association of Local Housing Finance Agencies, 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 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.
Press Conference in Washington, DC: The State of the Nation’s Housing: 1999 will be discussed at the press conference on Monday, June 21, 11:30 AM to 12 Noon at the National Press Club (529 14th Street, NW; Ballroom 13th Floor). A presentation of the findings will be released at the Conference on Housing Opportunity from 9:30-11:30 AM. The RIHA website is www.housingamerica.org.
Report available online: Beginning June 21, the complete report of The State of the Nation’s Housing: 1999 will be available at the Joint Center for Housing Studies’ website at www.gsd.harvard.edu/jcenter.