housing haves & have-nots: for whom the economy booms FWD

Tom Boland (wgcp@earthlink.net)
Tue, 5 May 1998 15:04:52 -0700 (PDT)

FWD  San Francisco Examiner  05-01-1998
     Distributed by the Scripps-McClatchy Western Service.

     HAVES AND HAVE-NOTS - By Stephanie Slater

SAN FRANCISCO (May 1, 1998 10:49 a.m. EDT http://www.nando.net) -- It's
becoming a predictable irony. In one section of the newspaper -- usually
business -- there is a story about the latest sign of this wonderful,
booming economy of ours. In another section -- usually at the back of news
-- there's a smaller story about the latest sign of increasing misery for
the poor.

This week, the sign is the same for the haves and have-nots: the nation's
tight supply of and huge demand for housing. It illustrates the two,
contradictory economies that exist today.

Based on what they have seen during the first quarter, realtors across the
country predict that 1998 will be a record year for home sales. The median
existing home price in the nation -- $127,000 -- already is up 5.8 percent
from March 1997.

In California, where the have economy is really booming, the increase is
10.5 percent -- or $196,400, up from $177,740 in March 1997.

Tim Corliss, president of the California Association of Realtors said:
"Pent-up demand, a robust economy and unbridled optimism for the future are
pushing median home prices upward while available inventory is approaching
historic lows throughout most areas of the state."

The same low inventory plagues the have-not economy. But, unlike their
upper middle-class counterparts with unbridled enthusiasm, the poor can't
alleviate the problem by opting to build their own dream house or by
offering several thousand dollars above the asking price and beating out
what's left of the middle class.

The working poor can't even get near the red-hot house buying market. They
rent. Yet, according to a report from the Department of Housing and Urban
Development, while the number of working poor is growing, the stock of
low-rent housing is disappearing.

Between 1990 and '95, the number of low-rent dwellings in the United States
dropped by 900,000 units. Meanwhile, the number of families needing "worst
case" low-rent housing assistance increased by 370,000 to 5.32 million.

"Worst case" describes the needs of families who earn less than half the
median annual income of their geographical area yet who must use 50 percent
of that income just to put a roof over their heads.

Most surprising, said the HUD report, is that the biggest increase in these
families has been in the suburbs, not the cities.

Part of the reason for this is suburban job growth, which has outpaced
urban job growth and drawn residents away from cities. Unfortunately, for
the working poor, much of the suburban employment is in jobs that barely
pay minimum wage.

Back in the roaring house buying market, however, the reverse is true.
Especially in California.

"Highly compensated high-tech and business service jobs in the
entertainment sectors are providing the natural foundation for continued
demand for housing, despite upward price pressure," said Leslie
Appleton-Young, chief economist for the state realtors association.

In other words, some people are making so much money, they don't care what
they pay for a house, only that they get the house. To find a home, they
depend on their ability to pay whatever it takes.

The poor get to depend on Congress, which hasn't voted for any increased
housing assistance in three years.

In the have-not economy, there's never a boom.


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