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Housing Mart at Risk if Recovery Falters
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NEW YORK (Reuters) - The U.S. housing market could be in trouble if the economic recovery
continues to stumble, an otherwise optimistic report released on Tuesday said.

  Related Quotes    The housing sector is the one prop supporting an economy struggling to
DJIA  9323.02 +4.06 recover for over two years as geopolitical tension as increased and the
NASDAQ1668.69 +2.11 1990s investment bubble has burst. Analysts are watching the sector
^SPC  1011.69 +0.95 carefully for signs of weakness.

 delayed 20 mins -  So far, housing has proven remarkably resilient, even as job losses and a
    disclaimer      slowing economy have forced more homeowners into foreclosure, according to
    Quote Data      a report from Harvard University's Joint Center for Housing Studies.
    provided by
      Reuters       But home prices have risen quickly over the last few years, forcing many
                    consumers to spend a higher percentage of their income on housing and
[Image]             leaving them even more vulnerable to foreclosures if they are laid off.
[Image]
  Digital Cameras   If layoffs do increase, some neighborhoods could face instability and
    Get a great     price declines from the resulting glut of homes put up for sale, the
digital camera for  report said.
not a lot of cash.
     Check our      The U.S. job market has been stagnant for months. Unemployment last month
exclusive guide on  reached its highest level in nearly nine years.
 what to shop for,
 plus how to print  Despite potential trouble from the broader economy, the outlook for the
    like a pro.     housing market is still strong, the report said.
[Image]
                    Demographics are supporting demand, as baby boomers reach their peak
                    wealth ages and look into remodeling and buying more expensive homes,
while their children buy their first homes.

Plus, the number of immigrant and minority households is growing, providing a huge source of
demand, the report said.

These sources of demand should prevent broad declines in housing prices, the report said.

AFFORDABILITY A PROBLEM

But even if housing prices do not fall dramatically in the long term, housing is increasingly
unaffordable, the report said. Home prices and rents have grown faster than inflation since
1975, while incomes for the bottom 40 percent of households have held more or less steady,
the report said.

Thirty-six percent of households struggling with affordability are minority households, the
report said.

Affordability problems increasingly affect middle-class households. Seventy-six percent of
households that do not live in affordable housing are well above the poverty level, the
report said. A household faces an affordability problem if it spends more than 50 percent of
monthly pretax income on housing, according to the report.

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