Joint Center for Housing Studies, Harvard University
Despite job losses in the rest of the economy, housing had another record-breaking year in 2003. Home sales, single-family housing starts, residential fixed investment, homeownership rates, mortgage originations, refinances, and home prices all reached new peaks. The only weak spots were the uneven rental market and the depressed manufactured housing sector. This housing boom has been both longer and more broadly based than previous expansions. Construction activity has remained strong in most states, and real house prices have climbed in nearly all metropolitan areas. Rents have increased in more areas than they have decreased. Unfortunately, affordability pressures are unlikely to ease. Many of the low-wage jobs created by the economy do not pay enough for a household to afford (at 30 percent of income) even a modest one-bedroom rental anywhere in the country. Similarly, retirement incomes are so meager that many seniors face heavy housing cost burdens on top of escalating healthcare costs. Adding to the pressures on low-income households is the cost of supplying new affordable housing. Restrictive regulations and public resistance to high-density development make it difficult to replace or add lower-cost units. Prospects for additional income supports or housing subsidies are equally bleak. As the federal deficit balloons, the calls to cut spending on social and housing programs are growing even as the demand for and costs of these programs continue to escalate.
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