by Tammy Hart

According to the U.S. Department of Housing and Urban Development (HUD), there is an ever-increasing demand and need for affordable housing. This is due in part to the overall rise in cost of housing and rentals being higher than the rise in incomes.

Housing prices have steadily increased over the past 50 years. One of the major contributing factors to the price rise is that financial institutions introduced record low- income rates for mortgages; they have also implemented steps to make the qualification process easier. Real estate agents and builders both agree that relatively low mortgage interest rates have been very encouraging to first-time home buyers.

Still, many people simply cannot afford housing. Not-for-profit agencies help: Habitat for Humanity International, for instance, has built and rehabilitated more than 150,000 houses, sheltering more than 900,000 people in more than 3,000 communities worldwide. But many people who need affordable housing fall through the cracks because their income levels fall between those qualifying for assistance and those able to afford to purchase a home on their own. Their numbers are bigger than you might think, and they include teachers, police officers, and fire fighters, to list a few.

These prospective buyers need affordable homes within a close (or at least reasonable) proximity to their workplaces and/or to the communities where they were raised. As disturbing as it might seem, some of our returning veterans are joining those squeezed out of the housing market. It is not hard to see why people are struggling: according to the U.S. Office of Federal Housing Enterprise Oversight, the cost of homes in California increased nearly 100% between 1999 and 2000. Such is also the case in certain sectors of New York . It seems as though financial institutions have formed alliances with the large builders who dominate the industry. For obvious reasons, they each have vested interests in the cost of housing continuing to rise.

Today the marked disparity between the annual increase in personal income and the annual increase in the median sales price of a single family home continues to grow. The construction, rehabilitation and maintenance of affordable housing need to increase to provide more rental options for people who cannot afford to own a home.

Theoretically, high housing prices will decrease if the overall supply of housing expands faster than the number of households. The short supply and high demand seem to be the driving factors for the current upward swing in real estate market trends. Migration from metropolitan areas may continue to contribute to soaring prices, even if a surplus of new housing occurs.

There is much debate about the idea of Smart Growth (which was developed as an innovative approach to serve the economy, the community, and the environment). Varying opinions weigh in about whether the concept of Smart Growth or the reality of sprawl conflict with the ability to provide affordable housing.

The goal of Smart Growth is to balance the many factors involved in residential development, such as preserving and protecting critical habitats and water supply, while also contributing to economic development. It also focuses on building strong neighborhoods, which includes providing a range of housing options to fit the needs of individuals at different income levels. Smart Growth claims to recognize the connection between community development and quality of life, since a strong community creates a greater capacity to address social, economic, and environmental issues and to develop action strategies. Many believe that Smart Growth is the instrument needed to achieve those goals.

Smart Growth is a success story in Maryland . There, over 80 programs assist in accomplishing Smart Growth, making efficient use of the land inside Priority Funding Areas and curbing sprawl outside of funding areas. The city of Davidson , North Carolina , implemented a Smart Growth rule to make 12.5 percent of all new housing affordable to families making less than the county’s median family income.

The 1991 HUD study, “Not in my Backyard,” determined that outdated, exclusionary and unnecessary regulations continue to block the construction or rehabilitation of affordable housing in some parts of America . More than a decade after the publication of “Not in my Backyard,” a different report, “Why Not in Our Community?” reveals that many communities are eradicating these barriers and supporting the production of housing that was formerly beyond the reach of many working families. It found that many jurisdictions were reducing regulatory barriers to affordable housing, particularly in areas where the supply of affordable housing is increasingly scarce.

President Bush’s proposed budget for fiscal year 2005 includes $31.3 billion for HUD. The spending plan continues to emphasize HUD’s commitment to promote affordable housing, strengthen communities and increase home ownership across America .

In association with HUD, the President is proposing initiatives to increase home ownership, including zero down-payment mortgages, The American Dream Down- Payment plan, home investment partnerships programs, housing counseling options, the flexible voucher program, single-family affordable housing tax credits, and self-help ownership opportunity programs.

More information about HUD and its programs is available on the Internet at .

Anthony Downs –