NATION Working families own fewer homes

A trend toward bigger, costlier homes hurts lower-income buyers, a group says.
WASHINGTON (AP) -- Homeownership rates for low- and moderate-income working families with children have declined since the late 1970s, even though the overall U.S. homeownership rate has risen, according to a study released today by an affordable-housing coalition.
The new analysis of already-released government data suggests in part that incomes for these working families haven't kept pace with soaring housing prices, highlighting a need for government to promote construction of more affordable homes, the Center for Housing Policy says.
Over the last couple of decades, builders have generally erected bigger homes than those built before 1980. "Larger homes tend to be more expensive, and any new supply created tends to be geared toward higher-income people," said Barbara Lipman, the center's research director.
The report said 68 percent of all U.S. homes were owned in 2001, up from 65.2 percent in 1978. However, the homeownership rate for families with children was 68.4 percent in 2001, down from 70.5 percent 23 years earlier.
The rate for working families with children was 56.6 percent, down from 62.5 percent. "Working families" meant those in which members work the equivalent of a full-time job and earn between the full-time minimum wage of $10,712 a year and up to 120 percent of an area's median income.
Mortgage-rate changes
Because the study dealt with data only up to 2001, it was impossible to connect how the rise in mortgage rates this year would affect homeownership, said economist David Crowe of the National Association of Home Builders.
"In and of itself, that would make it more difficult for people of modest means to get into homeownership," Crowe said. "We're hoping from a macro sense that an improving economy should counter the increase in interest rates, at least for the next year or so."
Mortgage rates were in the high teens in the late 1970s and early 1980s but have generally declined since then. Last year, rates hit their lowest level in nearly four decades, but they have inched back up over the last two months.
Homeownership rates for working families in 2001 were up somewhat since 1991, but still lower than 1978, suggesting that rising housing costs and a lack of affordable stock may be more important factors, Lipman said.
The median sales price of a new home in 1978 was $55,700, about four times the $14,258 median income of a working family with kids, according to census data cited by the group. The median new home in 2001 cost $175,000 -- five times the median income of $35,000.
Homeownership rates among families with kids may be affected in part by the increase of more single-parent families today than two decades ago, researchers said. Single-parent homes generally have lower incomes than two-parent homes.
However, homeownership rates also declined for those working families with kids in which two or more people worked, the study found.
Recent data
The most recent government data available show the national homeownership rate at an all-time high of 68.6 percent for the first three months of 2004. President Bush has credited the surge to both low interest rates and the tax cuts he pushed through Congress in 2001 and 2003.
The Center for Housing Policy is the nonprofit research affiliate of the National Housing Conference coalition. Conrad Egan, the conference president, praised other Bush proposals, including a homeownership tax credit and an initiative that proposes to let first-time home buyers take out government-insured loans without making a down payment.