Economic Prosperity and Housing Affordability
During the 1990s, the U.S. witnessed significant economic growth. This was accompanied by a spurt in the homeownership rate. While several reports in the media and articles in academic literature have examined trends and effects pertaining to these two issues, what has been surprisingly ignored is whether the prosperity of the 1990s made housing more affordable. In this study, we attempt to address this shortcoming. We analyzed data from the 1990 and 2000 U.S. censuses for the 100 most populous Metropolitan Statistical Areas (MSAs) using simple percentages and discriminant analysis techniques. We found that the proportion of households that did not have affordable housing remained almost unchanged from 1990 to 2000. Yet the proportion of housing cost-burdened owner households increased dramatically over this period. While housing was generally less affordable for non-White households, Hispanic households seemed to be better off than Blacks. We also found housing to be significantly less affordable in MSAs in the West, MSAs that experienced high population growth in the 1990s, and those with high economic growth rates or with populations over 3 million in 2000. We conclude that the economic prosperity of the 1990s did not make housing more affordable, and present a few suggestions for policy intervention that may help overcome socio-demographic and place-based barriers to affordable housing.