We have lots of people moving into the neighborhood -- and nowhere to put them.

Homeownership is up across the country -- to 67.4 percent -- the highest it's been ever. Michigan, by the way, has the highest homeownership rate at 77.2 percent. Nevertheless, there's a growing demand for homes, which may cause house prices to continue their upward spike, despite all the economic woes we think we're facing (at least for the moment).

The National Association of Home Builders says this demand requires nearly 1.8 million new housing units to be constructed each year in the next 10 years -- just to keep up. Over the last decade, however, builders were only putting up 1.66 million units per year.

The NAHB also reports that while homeowners want a suburban property on a big lot, metropolitan job markets are encouraging higher density development such as smaller lots, townhouses and condo construction.

Why all the pressure on development? Simply, we have more people living in the U.S. than ever before, according to the U.S. Census Bureau -- up 13.2 percent in the last decade. The population will keep growing during the next 10 years, as well. In addition, over the next five years, NAHB says the aging baby-boomer generation will start trading up more and purchasing more second homes as they start retiring and spending their IRA and 401K funds.

Meanwhile, rents keep increasing, pricing out many working families from the very elemental first rung of housing in this country.

Figures from the Census Bureau and the National Housing Conference show that the number of low-income families facing a critical need for rental housing grew by 64 percent between 1997 and 1999. NHC classifies a family with critical housing needs as one that spends more than half of its total income on housing and/or lives in a severely inadequate unit.

NHC has joined with various other real estate associations to form the Coalition for Affordable Rental Housing to address the growing affordable housing crisis. Other groups include Mortgage Bankers Association, the AFL-CIO Housing Investment Trust, the National Apartment Association and the National Association of Realtors, to name a few.

The coalition has called for a 25 percent increase in FHA multi-family housing guarantees (with adjusted amounts for high-cost areas across the country). NAR says when the FHA limit was raised three years ago 40,000 additional homes were sold.

While increasing loans amounts can put more people into houses, we still have one more statistic that bothers me and I'm not sure government regulation can help eliminate it. It's the rate by which most Americans are saving money. Actually, it's a negative rate. Even though we as a country need more houses to be built, Americans' saving habits may keep them out of housing more than the scarcity of affordable homes.

The Bureau of Economic Analysis reported in February that not only are Americans not saving, they're spending it almost as fast as they are earning it. In 1996, consumers were saving about 5 percent of their monthly disposable income, now consumers are actually going deeper and deeper in debt.

The craziest thing about this change is that Americans aren't spending all they have because of a drop of income or because costs are rising -- in fact they actually make more money. They just keep spending it faster.

"Personal saving as a percentage of disposable personal income was a negative 1.3 percent in February," according to the report -- the same negative amount as in January. In other words, consumers are dipping into their savings or borrowing for everyday living.

It doesn't matter how many mortgage loan programs government agencies set up, without personal responsibility, housing will never be affordable.

M. Anthony Carr is a Washington-based author who has written about real estate issues for more than a decade.

Published: May 25, 2001

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