State of the Nation's Housing: 2002
JCHS
2002
Joint Center for Housing Studies, Harvard University
JCHS, (2002), "State of the Nation's Housing: 2002", Joint Center for Housing Studies, Harvard University.
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Executive Summary
WITH THE ECONOMY EMERGING FROM ITS FIRST recession in nearly a decade, the housing sector continues to display remarkable resilience. Even after the events of September 11th threatened to deepen the downturn, rock-solid home prices and historically low mortgage interest rates helped consumers keep faith in the housing sector. As a result, not only home sales and production but also home improvement spending climbed to record-setting levels by year-end. Continuing a seven-year surge, inflation-adjusted home prices in 2001 were up fully 5.7 percent from 2000 (Figure 1) as more than 70 million homeowners continued to build home equity at astounding rates. Gains realized from the sales of 5.3 million existing homes enabled many households to purchase better houses. Among the approximately 7 million homeowners who refinanced last year, more than half took out cash in the process. Although households that traded up to better homes or cashed out equity added to their mortgage debt, overall home values rose enough last year to offset these increases.
CONSOLIDATING HOMEOWNERSHIP GAINS Despite the upward trend in prices, millions of lower-income households have made the transition to homeownership in recent years. Spurred by the strong economy, favorable interest rates and innovations in mortgage finance, the share of home purchase loans going to lower-income households and/or households living in lower-income communities increased steadily over the decade. This growth, however, has been fueled by the emergence of a dual mortgage delivery system in which new types of lending organizations provide distinctly different mortgage products to lower-income markets than those commonly offered in higher-income markets. In fact, government-backed loans and lending by subprime and manufactured housing specialists account for almost two-thirds of recent increases in lower-income neighborhoods (Figure 2). Conventional prime lending¡ªthat is, mortgages with the lowest rates and most favorable terms¡ªaccounted for just 37 percent of the growth in lowerincome lending, compared with 81 percent of loans to higher-income borrowers in higher-income neighborhoods.
_ Executive Summary 1
_ Housing and the Economy 4
_ Demographic Drivers 9
_ Homeownership 14
_ Rental Housing 19
_ Low-Income Housing Needs 24
_ Appendix Tables 29 |
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