Housing Cost Among Top Consumer Worries

Affordable housing advocates, builders, municipalities and legislators refer to the lack of affordable housing in a number of American cities as a crisis. A September 2003 survey by the National Association of Realtors confirms that many Americans feel the same way.

"Our survey found that people worry about affordable housing just as much as they worry about affordable health insurance and only slightly less than jobs and unemployment," NAR president Cathy Whatley says. Concern about housing (47%) ranked higher than pollution (31%) and crime (24%).

According to the study, 67% of Americans living in the top 25 housing markets are concerned about the cost of housing, both for-sale and rental, in their area. The public's concerns are well-founded. Although homeownership rates continue to rise, 14 million Americans pay more than 50% of their income for housing, and 17 million pay 30% to 50%, according to the 2003 State of the Nation's Housing report from Harvard University's Joint Center for Housing Studies.

The markets with a high percentage of "very concerned" citizens (right) might shock some builders. Houston, for instance, traditionally has been near the top in terms of affordability. The Housing Cycle Barometer, a quarterly update on affordability by John Burns Real Estate Consulting, helps explain the possible shift in perception. Burns compares current housing cost appreciation with income and job growth in a market, and then grades it according to the market's historical affordability. Burns points out that while a market such as Houston still might rank well in national comparisons, high appreciation and high construction activity can concern people.

Burns' research largely corroborates the NAR findings, as he sees a moderate to cautious short-term outlook for every top 10 market except Washington and Philadelphia.

Top 5 Obstacles to For-Sale Housing Affordability Down payment and closing costs 74% Property taxes 73% Confidence in job security 72% Finding an affordable home they like 70% Cost of homeowners insurance 59% Source: National Association of Realtors

What Are the Concerns?
NAR survey respondents cited a down payment and closing costs, property taxes and job security as the chief barriers to affordable housing. Most builders would say land costs, the approval and permitting process, and labor and material costs, but consumer perceptions of affordability are personal and directly related to abil-ity to pay rather than underlying factors that affect the cost of a home.

"When you're looking to buy a house, you ask yourself two questions," says Mario Procida, president and CEO of Procida Realty & Construction Corp. in New York. "Do I have enough money in the bank, and can I get mortgage approval?"

Procida, who builds market-rate and affordable housing in New York and New Jersey, says buyers look at the monthly cost of owning a home more than the sales price.

While 36% of the survey respondents said they worry about their ability to ever own a home, more were concerned about having to live in undesirable locations (47%) or endure long commutes to get to work from affordable areas (42%).

The most prevalent fear expressed in the NAR study - by 62% - is that the cost of housing is getting so high that teachers, police and firefighters won't be able to live near where they work.

A majority said governments should be responsible for getting affordability on track, with 71% saying it should be a higher priority. And 82% said they would support building affordable homes in their area if they fit with the community and are aesthetically pleasing.