"The State of the Nation's Housing 2006," one of the most anticipated annual housing reports, has just been released by the Harvard Joint Center for Housing Studies.

The report overall is positive on the housing market -- that "the housing sector continues to benefit from solid job and household growth, recovering rental markets, and strong home price appreciation," and as long as these remain in place, "the current slowdown should be moderate."

Households are expected to accelerate from about 12.6 million over the past ten years, to 14.6 million over the next ten which combined with projected income gains and a "rising tide of wealth" should "lift housing production and investment to new highs." On the strength of this growth alone, housing should reach new all-time records, predicts the Center.

However, affordability will also intensify, as the economy is generating many low-wage jobs and land use restrictions are driving up housing costs. Incomes are rising much faster in the top ranges than in the bottom ranges for homebuyers. From 2001 to 2004, the number of households paying more than half of their incomes for housing shot up by 1.9 million, says the Center, bringing the number of low and middle-income households with severe housing cost burdens to 15.6 million.

Affordable rental housing is disappearing -- between 1993 and 2003, rental units affordable to those earning $16,000 or less shrank by 13 percent, creating a shortfall of 5.4 million units.

Homebuyers increasingly turned away from fixed-rate mortgages to adjustable-rate mortgages and other products to afford their homes. In just two years, the interest-only loan which defers principal payments to lower immediate monthly costs, shot from relative obscurity to 20 percent of the dollar value of all loans and 37 percent of adjustable-rate loans originated in 2005. Payment option loans, those that allow borrowers to make minimum payments while the balance balloons, accounted for nearly 10 percent of 2005's loan originations.

As bad as that sounds, the report says that only three percent of owners had equity less than five percent in their homes, and 87 percent had a 20 percent or higher equity stake in 2004.

Housing gains are continuing even while home sales are softening.

Driving housing will be the ever-dependable baby boomers who will boost markets for senior housing and second homes while their children, along with second-generation Americans and immigrants will buoy demand for starter homes and apartments. This generation will favor rental over for-sale housing, predicts the Center.

Published: June 14, 2006

Use of this article without permission is a violation of federal copyright laws.

Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. For more articles by Blanche, click here.