Home Work

There's a potential crisis brewing nationally and locally. Troubled projects in Bond Hill, Westwood, Hyde Park and downtown capture our collective attention with headlines for a day or two and then fade into the background. We remain unaware of the long-term implications of these chronic symptoms, taking note only when there's pain, hoping that it passes with little intervention and we continue on unphased by what transpired.

It's difficult to connect the dots that add up to a future shortage of housing, in part because the overall supply is adequate and our senses are overwhelmed with new developments everywhere. The overload can and does force to the background the issues and problems surrounding low- to moderate-income developments, and without note they fade and drift as a problem and an issue. There's no collective pain, loss, suffering or damage, short- or long-term.

What's at issue isn't the bursting of a housing bubble, which would lead to a collapse in home prices — a scenario that's unlikely. The cause for concern centers around the expanding gap between housing "haves" and "have nots" that could lead to a housing affordability crunch.

Communities are grappling with a serious need to provide adequate, affordable housing and to control the growth that limits expansion and assists in driving up housing costs. Communities nationwide are beginning to report shortages of homes and higher prices because of growth restrictions.

I won't even touch the environmental issues pitting government entities and communities against developers and environmentalists in a never-ending circular battle.

As the U.S. population continues to grow by an estimated 13 million to 15 million new households over the next decade, about 1.6 million new homes will be needed each year. Unfortunately, according to housing experts like Franklin Raines, chairman and CEO of Fannie Mae — the largest source of financing for home mortgages — affordable housing isn't increasing at a sufficient rate to keep up with the growing demand.

What's needed, according to Raines, are "Smart Growth, Smart Choices" policies that plan for and accommodate the anticipated growth in population and housing demand. The design should incorporate strategies that use land efficiently, promoting affordable housing and not preventing it. To facilitate this, Franklin and Fannie Mae have committed to boosting capital to minority families from $420 billion to $700 billion over the next decade.

A pilot program entitled "Emerging Markets Initiatives" is operating in six cities and targets African Americans and Hispanics. It will assist 11 million families searching for a starter home by targeting working households moving up from rental housing. Fannie Mae intends to add more small- to mid-sized lenders and to work with brokers and real estate professionals to increase the potential that the products are getting to the people who need them most.

The effectiveness of these programs and initiatives isn't part of this debate. What's noteworthy is the fact that the federal government recognizes and is addressing an issue before it spirals out of control.

The tone of Fannie Mae and other related agencies indicates a desire to balance the needs of a variety of interests by using, of all things, some common sense. I just hope that over time as it filters down to Cincinnati the desire and will to create and maintain a balance between a variety of disparate entities continues.

THIS WEEK'S TIP: Older Americans Are Growing in Numbers and Market Power
We've all heard the stories about the graying of America, but you might not realize how strong the influence of older Americans is likely to become in the next few decades. Here are some interesting tidbits related to older Americans and the housing market:

· 2.86 million U.S. households over 70 own their homes free and clear, have an annual income below $30,000 and have home equity over $60,000;

· 85 percent of AARP members (age 50 and older) prefer to age in places where they live, according to the American Association of Retired Persons;

· 66 percent of seniors rely on Social Security benefits for 50 percent or more of their income;

· By 2025, senior citizens 65 and older will account for 20 percent or more of the population in 27 states and 15 percent or more of the population in all but one state (today, only Florida is near the 20 percent threshold);

· By 2050, seniors might account for one in five Americans (recently, by contrast, the senior share was 12.7 percent, or 34.2 million people).