| Minorities seen driving housing growth Study: Market to remain strong By Chris Reidy, Globe Staff, 6/7/2004 Women, minorities, and immigrants will play a larger role in a US housing market that's likely to remain strong as the economic recovery gains momentum, according to a new study from Harvard University's Joint Center for Housing Studies. The study is the center's annual ''State of the Nation's Housing" report, which has been issued every year since 1988. ''Largely as a result of immigration, minorities accounted for 27 percent of households in 2003 and will contribute at least two-thirds of net household growth in the coming decades," said Nicolas P. Retsinas, director of the Joint Center. According to the study, minorities accounted for two out of five net new homeowners from 1994 to 2003. And between 1980 and 2000, the number of households headed by unmarried women increased by almost 10 million. In 2000, nearly 16 million households were headed by unmarried women homeowners, up from just over 12 million in 1990. And roughly a quarter of single-mother households in 2001, or 2 million households, spent half or more of their incomes on such housing costs as rent, compared with about a tenth of households headed by single fathers, the report said. Switching from a demographic analysis to an economic outlook, the report noted that the housing industry is well positioned for another strong decade after an astonishing boom in recent years. That housing boom is larger and more broad-based than any previous expansion, helped by mortgage rates that have been at or near record lows in recent years. Low rates are one reason why this housing boom has outlasted both a recent recession and a jobless recovery, the report said. Now, though, mortgage rates are generally starting to creep up, and many economists believe that the period of low rates will end as the economy gains strength and adds more jobs. For the week ending June 3, the average rate on a 30-year fixed-rate mortgage was 6.28 percent, down from the 6.32 percent average the previous week, but well above the 5.26 percent average for this time a year ago, according to Freddie Mac, a large purchaser of US mortgages. Offsetting the rise in rates is an increase in consumer confidence. As the economy gets stronger, consumers feel more secure about making home purchases. And to insulate themselves from rising rates, more consumers are opting for adjustable-rate mortgages, which translate into lower monthly house payments in the early years of ownership. For a consumer who moves regularly, an adjustable-rate mortgage can make more sense than a 30-year fixed mortgage. Currently, for new mortgages, adjustable-rate mortgages make up about one-third of the market, Freddie Mac said last week. Looking at the big picture, the Harvard housing study noted, ''With the economic recovery underway, the question now is whether housing will achieve a soft landing in which housing prices, sales, and new construction ease rather than drop off sharply." According to the study, most signs point to a soft landing. A sharp correction is unlikely unless the economy unexpectedly contracts. One reason why housing prices are so high in Eastern Massachusetts is that there's not enough new housing. According to the Home Builders Association of Massachusetts, the Bay State needs at least 30,000 new housing units a year. In 2003, building permits were issued for only 19,273 units, meaning that demand exceeds supply, the home builders have said. According to the Harvard study, five states -- Florida, California, Texas, Georgia, and North Carolina -- accounted for 40 percent of housing permits issued nationwide in 2003. Chris Reidy can be reached at reidy@globe.com. This story ran on page C3 of the Boston Globe on 6/7/2004. © Copyright 2003 Globe Newspaper Company. |