More minorities own the roof over their heads

The most fitting icon for this era of prosperity may turn out to be a picket fence.

That's because the dream of owning a home is being realized by a greater share of Americans than ever before.

More striking, the rate of homeownership is shattering records for nearly every race group, age category, and region of the country, according to two new comprehensive housing reports, one released today.

"By most all measures, we are the best we've ever been," says Nicolas Retsinas, director of Harvard University's Joint Center for Housing Studies, author of the report.

While highlighting the challenge many people face as housing prices and rents rise, the Department of Housing and Urban Development came to a similar conclusion with respect to ownership in this month's State of the Cities report. It notes that "all racial and ethnic groups have shared in this homeownership boom."

Homeownership matters to society as a whole because it tends to promote more stable communities, say experts.

Around the globe, even in communist countries like China, governments are pushing the idea of owning a home, seeing it as logical extension of the quest to privatize economies. Some European countries already surpass US ownership rates.

But the gains here have been remarkable, say experts, and represent one of the most pronounced achievements of the economic expansion of the 1990s.

Since 1992, more than 8.7 million American households have become homeowners. As a result, just over 67 percent of the nation's households - and the figure was still rising through the first quarter of this year - now own the roof over their heads.

It is also important for social stability, say some housing experts, that home ownership be equitably spread among different racial and income groups.

On that score, the American housing picture has some flaws.

As prices and rents have risen and the welfare state contracted, the number of low-income households with severe housing problems has remained largely unchanged, suggesting a deeper income-based split is taking hold in housing. That makes experts shudder to think what may happen when the US economy experiences a downturn.

Further, the gap between homeownership rates for whites and minorities remains substantial. More than 73 percent of white households own homes, compared with 47 percent for blacks and 46 percent for Hispanics.

Still, minority ownership rates are now the highest they've ever been and have grown marginally faster than for whites since 1994.

Spreading the wealth

Aside from its broader social virtues, owning a home has clear individual benefits.

Despite the spread of stock-market wealth among the American population in recent years, housing continues to be the greatest engine of individual and family wealth, according to new data in the Harvard report. Even among homeowners who also own stocks, 60 percent of that group have more equity in their homes than in stocks.

And housing, per se, continues to be a more equitable generator of wealth than the stock market.

For instance, the top 1 percent of US stockholders own 37 percent of all stock wealth, while the top 1 percent of all homeowners account for only 13 percent of the nation's home equity, says Mr. Retsinas.

Despite the glowing ownership data, both the HUD and Harvard studies highlight a brewing "affordability" crisis in the housing market.

American dream gets more expensive

House prices have risen at more than twice the rate of inflation for the past two years, and rents are jumping nearly as fast. One result, according to HUD, is that a record number of very low-income families either pay more than half their income for housing or live in what HUD considers "severely inadequate" housing.

With a growing share of US households relying on two incomes, as compared to a generation ago, homeownership is not coming any easier for today's families.

And while the number of home buyers has accelerated in recent years, thanks to low mortgage rates and terms that make it easier for many to become owners, rising mortgage rates could dampen that trend, says the Harvard report.

One of the down sides to housing expansion is that it often brings sprawl and its attending environmental and infrastructure problems.

And despite all the stories of empty-nesters returning to the city and the revitalization of downtowns, the suburbanization of America continues unabated.

"Every generation of Americans for the last 60 years has been more suburban than the previous generation. We don't see any change in that today," says Retsinas.

One of the things that is changing, despite a growing environmental ethic and the shrinking of the average size of the American family, is the thirst for space.

In 1970, the average square footage of a new American home was 1,500 square feet. Today, it's 2,300.

(c) Copyright 2000. The Christian Science Publishing Society