Housing crisis builds as home construction falls
By Hayael Nasser
USA Today
While homeowners are rejoicing at soaring values, a downside is emerging: the worst housing crunch in decades.
The shortage is most acute in California, the Northeast and parts of the mid-Atlantic, but experts warn that it could spread. That's because housing construction is lagging population growth, and no relief is in sight.
Home prices have gone through the roof in the San Francisco, Boston and New York metro areas.
Now, however, the crunch is starting to be felt in fast-growing metro areas from Washington, D.C., to Seattle.
Home prices increased 8 percent in the first quarter of this year compared with 2001, the National Association of Realtors reports. The median national price was $150,900. The biggest price increase was in the Long Island suburbs of New York City, where the median sales price jumped 26.5 percent to $287,000.
Experts say that the market outlook is gloomiest for first-time buyers, middle-income workers and the poor.
In the 1990s, the nation added more people than in any other decade, but home construction fell to its lowest level since the 1960s. Also feeding the demand for housing: lower interest rates, zero-down mortgages and a booming vacation-home market.
The market will get tighter as the children of baby boomers born after 1985 begin looking for housing in a few years, warns Dowell Myers, professor of urban planning and demography at the University of Southern California. "If we had a housing crisis before, now we have a crisis squared," he says.
Builders and housing analysts blame the construction shortage on rising land prices, escalating government fees charged to builders, environmental regulations, zoning restrictions on developing apartments and the elimination of tax breaks that encourage the construction of rental units.
Especially worrisome to housing analysts is the decline in construction of affordable housing, such as condominiums, smaller homes and apartments. Population growth in many cities is driven by immigrants, who live primarily in apartments and inexpensive homes.
The U.S. Department of Housing and Urban Development says the shortage of affordable housing isn't nationwide. But the department is trying to promote construction of multifamily housing in tight housing markets with more attractive government-insured financing.
