More Americans Are Now Buying Homes, Study Says

With lower housing costs and renewed income growth, American households are once again moving up the housing ladder to homeownership, according to a study by the Joint Center for Housing Studies of Harvard University.

Homeownership rates are already on the rise for most age groups, halting the downward spiral of the 1980s, according to the annual study, “The State of the Nation’s Housing 1994.” Demographic trends--including the aging of the baby-boom generation and the movement of immigrant households into the economic mainstream--should support strong home-buying potential throughout the rest of the 1990s.

“Not since the 1950s has single-family demand so dominated the housing market,” said the center’s director, H. James Brown. “The ingredients are in place to lift the national homeownership rate to an all-time high by the year 2000.”

As for the recent rise in interest rates, the report notes that income is also rising, and concludes that stronger income growth could well offset the effect of higher mortgage costs.

“Mortgage interest rates are only one factor in the home-buying equation,” said the center’s executive director, William Apgar. “The strength of single-family production and sales throughout the country suggest that the current recovery is widespread enough to withstand an uptick in rates.”

The study cautions that the growth of homeownership also has a down side. Most new construction today is of better-quality, single-family homes, located at increasing distances from the central cities of large metropolitan areas. “Left unchecked, the decentralization of development will reinforce the spatial isolation of the poor in economically depressed areas,” Brown said.

“For low- and moderate-income renters, lack of savings to cover the down payment and closing costs blocks progress up the housing ladder,” Apgar said. “And for minority households, discriminatory barriers present further obstacles.”