Growth in Home Prices has its Achilles Heel

An article in the Los Angeles Times (May 20, 2004) covered remarks by Nicholas Retsinas of Harvard University's Joint Center for Housing Studies which stated immigration, global financing and slow growth/restricted growth policies were the three main factors in the surge in housing prices. Now, the Center's 2004 State of the Nation's Housing study also talks about overcrowding and the higher amount of income spent on housing as the downside of this market. Well, it wasn't perfect. While renters and homeowners spent more, mortgage rates also dropped from 7.9 percent in 2000 to 5.7 percent in 2003. But household growth will continue to grow as immigration and other household formation factors fuel the demand. Unmarried women accounted for 30 percent of the growth in homeowners from 1994 to 2002, the study also found. See that report here.