US Rich/Poor Divide Extends to Housing In Cities, Suburbs

Rosy overall home market belies urban problems

America's housing market has a sunny future. But, in a sign of an America "increasingly divided," urban renters face hard times.

Those are the key findings of a study released today by Harvard University's Joint Center for Housing Studies.

"With improved affordability, the number of homeowners is growing at a record pace. The bad news," says William Apgar, the study's author, is that "the current homeownership boom is bypassing major center cities."

The housing haves, mostly baby boomers in white-collar suburbs, are predicted to make gains over the next 15 years, trading up to bigger and better homes. The have-nots, in contrast, will have a harder time holding on to their slim piece of the housing pie. Low and middle-income renters in urban areas will have to scramble to pay higher rents in poorer quality housing.

The study claims that the divide between suburban homeowners and urban renters is not only widening in terms of class and income but also geography.

For years, the dream of backyard barbeques and quiet suburban streets has lured the upwardly mobile out of American cities, leaving crumbling inner urban areas behind. This is a long-standing concern, but according to the report, it is taking on new dimensions.

"Is it new? No. But should we be paying more attention to these trends? I think the answer is yes," Dr. Apgar says in a telephone interview.

The main culprits, as outlined in the study, are the following:

*People and jobs are moving to outlying areas. This is a boon to suburban developers, but has put the brakes on urban construction, which "saps the economic life of major urban centers," the study says.

*Rental units, which house most lower-income urban Americans, are becoming less affordable. "The affordable rental stock is steadily shrinking," as low-cost units are demolished, upgraded, or changed to nonresidential use. The number of unsubsidized affordable units has fallen significantly in all regions over the last two decades. Impending cuts in federal housing subsidies will add to the problem. Moreover, many of the rentals are old and structurally inadequate.

*Incomes have fallen since 1974, relative to inflation, for Americans in the lowest 25 percent of the earning ladder. "The labor force has become increasingly divided between well-educated and well-paid workers and less well-educated and less well-paid workers." The latter are being left behind as the better-educated follow higher paying jobs out of the cities.

If the polarizing trends continue, the typical US city of the 21st century will look something like a giant doughnut, with a depressed center and a sugar-coated edge. But that edge of good housing and services, the study warns, is being pushed ever farther from the "urban core".

It is no longer just the inner city that feels the effects of urban flight. The study says that "decentralization," the movement of homebuyers progressively farther from the city center, affects a wider swath of America's urban areas.

In fact, some inner suburbs now face inner-city problems. "In many cases, the suburbs wind up in even worse shape than the downtown," says Paul Jargowsky, a housing expert of the University of Texas, Dallas, "Because all they have is depreciated property. At least the downtown still has the art center and football stadium."

The Harvard study recommends a range of remedies for closing the housing gap, from local neighborhood renewal efforts to federal-government intervention.

But at the national level, there seems to be little agreement about what steps are needed to close the housing gap.

"There's no [political] consensus except on policies that will have no effect, like community centers and free economic zones," Mr. Jargowsky says. "It reflects an implicit belief that if there is something wrong with the neighborhoods, it must be the neighborhoods themselves." He supports the conclusion of the Harvard study, which points to a more polarized economy and wage structure as the real issues.

The study forecasts a continuing population shift toward the South and West, with only 40 percent of Americans living in the Midwest or Northeast in 2010.

While spotlighting city problems, the study sees good news for home buyers: After shooting upward in the 1980s, home prices have become more stable. Moderate interest rates and job growth have pushed the national homeownership rate to 64.7 percent, a rise of 2.3 million households in the last two years. But this is a suburban phenomenon.

The flight to the suburbs, Apgar says, stems not so much from American home buyers not wanting to live in cities, but from the vagaries of the nation's housing market tending to push them out to the periphery. "Oftentimes people have no choice but to leave for the suburbs." Families often leave seeking lower crime rates or better schools.

Apgar hopes that the study will find its way into Washington policy circles.

But analysts say the problem is one that does not lend itself to the ready-made solutions of election-year politics. The urban housing issue is intertwined with hot-button issues of crime, government subsidies, and welfare.

The hope of studies like this one says Jargowsky, is that "if somebody has a good idea they can use the study as ammunition to make themselves heard."

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