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The Honolulu Advertiser
Posted on: Sunday, March 26, 2006

Wages stagnant; fewer workers can buy homes

 •  Condos fall short of american dream

By NOELLE KNOX
USA Today

Nearly 70 percent of Americans own their homes, a record high, but the rate of home ownership for working families with children is lower than in 1978, according to a recent study by the Center for Housing Policy.

The surprising trend is being driven by a combination of factors: soaring housing costs that have overshot wage increases, higher healthcare bills and a rise in the number of single parents.

Minority working families have struggled the most. Their home ownership rate has stagnated at 45 percent, far below white families (71 percent) as of 2003, the last year for which figures are available.

The effects are being felt in communities where, if they want to own homes, teachers, police and firefighters can't afford to live in the communities where they work.

Some see longer-term consequences if the trend doesn't change. "You need a youthful workforce to replace people who are retiring," says Barbara Lipman of the Center for Housing Policy, the research arm of the National Housing Conference, a housing-affordability advocacy group. "It's an important part of economic vitality."

The drop in home ownership rates for working families carries repercussions for their children, too. Studies have shown that children of homeowners are more likely to perform well in school and are less likely to have behavior problems, Lipman says.

Though her researchers lacked access to Census data after 2003, Lipman says the trend seems to have persisted.

Home ownership for working families is highest in the Midwest, followed by the South, the Northeast and the West. That's no surprise to Sheila Harris of the Arizona Department of Housing. Home prices there have soared 49 percent since 2002, she said, while incomes have risen an average of just 3 percent.

"Our governor has asked us to create a statewide task force to look for ways to create affordable housing," Harris said. The task force will focus on easing financial barriers, improving land access and providing creative financing for builders and buyers.

In California, Marisela and Jose Bacaro know what a back-breaking challenge it is to have children and afford a home. Marisela, 24, works as a coordinator for Hollywood Records in Los Angeles; Jose, 25, works at a bottling plant in Los Angeles.

On their salaries, it's hard to save money while raising Alexis, 6, and Emily, 4. "With kids, they always need something," Marisela says.

The median-priced home in Los Angeles — half cost more, half less — is $529,000, far beyond their dreams. Instead, they're hoping to buy a condo with no down payment and an interest-only loan of $300,000.

The study highlights a shortage of affordable homes.

"There are government assistance programs, but they have a diminishing influence on the housing market," says Nicolas Retsinas, director of the Joint Center for Housing Studies at Harvard University.

A key problem, Retsinas says, is that "the labor market in our economy produces lots of low-wage jobs. There is an incredible disconnect between the housing market and the labor market."