Home prices continue a 13-year rise

People may be talking about whether there’s a housing bubble ready to burst, but Harvard economists see little reason for homeowner gloom: U.S. home prices have been climbing for 13 years, with the rise in 2004 the largest annual jump since 1979.

In a report released Monday by the university’s Joint Center for Housing Studies, economists said the market is fueled by easy credit, low interest rates, affluent baby boomers buying second homes and the continued growth of immigration. Also, thanks to an expanding economy, regulatory constraints and a limited supply of land for development, they see no sign of a slowdown.

Most housing indicators set records in 2004, the report noted, including homeownership rate, new and existing home sales and single-family housing starts.

But some Americans have been left out of the party. Renters face a diminishing supply because rental-housing construction fell to a 10-year low in 2004 and many can’t afford the higher-end units being built.

The price hikes in the purchase market have caused anguish for would-be first-time homeowners, particularly those in high-priced markets such as Southern California, New York, Florida and the District of Columbia. In 33 of the nation’s 110 metropolitan areas, median home prices now are about four times median incomes.