One housing expert compares the current boom in homeownership to the title of a movie nominated for an Oscar as best picture.
"This is as good as it gets," said Nicolas Restinas, director of the Joint Center for Housing Studies at Harvard University, which last week released its study: "The State of the Nation's Housing: '98."
According to the study, the national homeownership rate has hit an all-time high of 65.7 percent with the number of homeowners skyrocketing in the past three years by more than 4 million households.
Although it cites some of the lowest inflation rates in the last 50 years as a key to the housing boom, the study also gives large credit to the number of minorities and immigrants coming into the market.
"Immigrants are becoming homeowners at a rapid level these days," Restinas said. "Although accounting for only 17 percent of all homeowners, minority and immigrant households are responsible for 42 percent of the homeownership gains [made in the last three-year period]," Restinas said.
Of these new homeowners during the past three years, 14.6 percent are African-American and 14.3 are Hispanic.
Asians and immigrants made up the remaining 13.2 percent of the new minority homebuyers, the report stated.
"African-Americans are the main beneficiaries of the economy, buying at a record level because of low interest rates, which translate into low mortgage rates," Restinas said.
This, he said, is one difference between today's housing prosperity and the buying frenzy that took place in the mid-1970s.
According to the study, the record eclipses the previous three-year mark set during 1975-1977 when home sales increased from 549,000 to 819,000 -- a period when the first wave of baby boomers began to buy homes.
Published annually for the past 10 years, this year's study produced the most positive statistics since the joint center began releasing its findings in 1987.
The report also cited unprecedented flexibility of lending standards at banks and other financial institutions. New mortgage products are making homes more accessible to people who previously couldn't qualify for a mortgage.
The study showed that the share of lenders nationwide offering three- and five-year adjustable-rate mortgages has risen from approximately 20 percent in 1990 to almost 80 percent last year.
Likewise, the down payments required on some loans have been reduced to less than 5 percent of the sale price, according to the study.
Among the study's other findings are:
* The large disparity between minority and white ownership rates remains nearly unchanged, despite the recent expansion of mortgage lending opportunities, with whites accounting for 83 percent of the 67.1 million homeowners last year.
* Asians and Hispanics in the 25- to 34-year-old bracket make up the group with the highest rate of first-time homebuyers.
* With lower inflation-adjusted earnings than their counterparts 15 years ago, 25- to 34-year-olds with only a high school education are falling further behind in their ability to buy a house.
* Between 1993 and 1996, mortgages for low- and moderate-income buyers rose by 30.2 percent, while lending to upper-income buyers increased 20 percent.
* As children of baby boomers start to form their own households during the next 10 years, multifamily and manufactured housing may make up a larger share of new construction.
* People 75 and older -- expected to increase by 2.4 million in the next 10 years -- are under-served by affordable housing and will need more housing tailored to their needs.
The report also addressed population growth, showing where home building has shown the most activity.
Nevada, due in part to the growth of Las Vegas, is the fastest-growing state, with a population increase of 25.8 percent from 1992 to 1997.
Maryland, with 3.9 percent population growth from 1992 to 1997, ranked 26th in terms of population growth. The study showed a decline in home production in Maryland.
The median sales price for a single-family house in the Baltimore metropolitan area in 1997 was $121,310 and down 5.2 percent from the peak price of $130,641 in 1989, the report said.
Although housing in Baltimore has become more affordable, urban flight nationwide still presents a problem for city developers and politicians, according to Restinas.
"There is definitely a clear and alarming disparity in Baltimore between the city and suburbs," said James Kelly, community builder for the Baltimore branch of the U.S. Department of Housing and Urban Development.
"HUD, in a joint effort with cities that face similar dilemmas, is working hard to try to reverse this trend."
Restinas agreed that this is a national trend, saying the growth rate in the cities is not keeping pace with rates in outlying areas.
He added that this trend is not as new as people think.
"The suburbanization trend has been around since the early 20th century. It's not a recent phenomenon. As early as the teens and 20s, people were moving out of the cities as they got more congested," Restinas said.
"It's definitely a challenge to get people back into the cities; municipalities are wrestling with school and security issues and grass roots improvement needs to take place."
Pub Date: 6/28/98