Trend Sees White Picket Fences Becoming Reality for Many Americans by Dena Amoruso It has been a wild ride for the real estate industry. The past four or five years are ones that may very well be reflected upon as some of the healthiest; the research that is gleaned from those years gives economists more meat upon which to chew while predicting future trends. Among the most respected surveys regularly conducted are those by the Joint Center for Housing Studies at Harvard University, a collaborative effort with the Harvard School of Design and the Kennedy School of Government, established back in 1959. Results of recent surveys by the JCHS show homeownership trends resulting from the past five years' boom economy, and some interesting observations can be made from sifting through the research. An unprecedented 66.8% of Americans now own their own homes, translating into 7 million new homeowners joining the American Dream from 1994 to 1999. According to the trend study, increases in home prices have out-paced overall inflation for six consecutive years, offset by a steady increase in personal income. The 12% increase in real incomes between 1994 and 1999 also drove the after-tax mortgage payment ratio in relation to income down from 18.3% to 17.6%. One of the more notable aspects of the trend is the record homeownership rate among young households in both single-person and non-family varieties. Referred to in the study as "Baby Busters," or the generation created after Boomers, this group is responsible for 5 million of the new owners added within the five-year period. The trend towards later marriage contributed to this, according to the study, with Busters waiting longer to make take one of life's larger steps. The steady influx of immigrants masks the overall impact foreign-born residents have on the big picture, even though immigrants have contributed an impressive 15% of the net growth in homeowners over the past three years, the report says. Because so many immigrants are fairly recent arrivals who tend to rent for several years before buying homes, ownership rates among them rise with the length of stay, with the longer-term members of that group making up a larger and larger percentage of homeowners. The study does cite that despite the impressive growth in the number of minority homeowners since 1994, "the gap between minority and white homeownership rates holds at 25.8%, an improvement of only one percentage point." The chasm between black and white homeownership rates continues to be a concern, despite a concerted outreach in recent years to even up the score. Still, there are approximately one million more blacks who own homes today than there were five years ago. Hispanic homeownership has risen markedly, according to the JCHS study, with the rate jumping from 46.1% in 1994 to 50.2% in 1999, adding more than one million more Hispanic homeowners to the mix than five years ago (nearly half of those new owners were born outside the U.S.). Hispanic homeownership, however, still lags a full 23% behind that of whites, the report goes on to say. An interesting footnote in the report adds that "the differences in income and age between minorities and whites do not fully explain these persistent disparities. If minorities owned homes at the same rates as whites of similar age and income, their homeownership rate would have been at 60.8% in 1998 rather than 47.1% -- a difference of nearly 3.5 million additional homeowners." Innovative mortgage products are a part of the equation for rising ownership rates, with the study citing both lower down payments and a larger share of adjustable rate loans becoming attractive options for new homeowners. Sub-prime lending has exploded in recent years for those of weaker credit scores, even in households whose incomes are as high as $75,000 annually. Among low-income minority homebuyers, subprime lenders captured 15 % of home purchase loans and a full 40% of refinances. One of the more curious observations in this part of the report says, however, that research by Freddie Mac in 1996 revealed that anywhere from 10 and 35% of subprime borrowers who went on to pay higher interest rates than prime borrowers, could have qualified for prime loans. Many of these borrowers were evidently not counseled on assessing their credit worthiness accurately, resulting in their taking subprime money. The opinion of the report is that this underscores the importance of homebuyer counseling and literacy campaigns in low-income and minority communities by mainstream financial markets. Although there is a trend for buyers to gravitate back to city centers, the suburbs are still getting the lion's share of both white and minority homebuyers overall, with the South and West leading the way for that historic but continuing trend. Hartford, Atlanta, and Miami top the list for low-income suburban homeownership, with 85% or more of low-income borrowers buying suburban homes, according to the JCHS study. Studies like these reveal that traditionally speaking, Americans are not backing down investment-wise on what they consider to be important in the big scheme of things. Home ownership tops the list for nearly 67% of them, and more eager buyers are waiting in the wings to make a white picket fence a reality for themselves and their families. There is no doubt that the homebuilding, home selling, and lending industries, teeming with thousands of other livelihoods dependent upon their existence, will stand poised to answer that call by trying to make it easier and easier for Americans to buy homes as the new millenium opens it doors. | 
