by Broderick Perkins

There's a major national housing boom brewing this decade and there may be little consumers can or should do about it in terms of their home buying plans.

A housing boom -- fueled by aging baby boomers, baby boomer kids, the boost from information technology, the looming lure of rising home price appreciation and the carrot of ever-easier financing, among other converging factors -- is the subject of a growing number of reports.

From Fannie Mae and Fredie Mac to the National Association of Retired People and Harvard University's Joint Center For Housing, crystal balls are ablaze with reports of a housing boom unlike any other since the end of WWII.

The national housing boom may not come with the frenzied intensity of recent California booms, but from sea to shining sea, the nation will be awash in unprecedented home selling, buying, building and renting, with extra pressure on the housing market that serves older Americans, the reports all say.

"There is this strong housing demand and a relatively muted supply. Increasing concerns about the environment and sprawl make it more difficult to expand and that will push up prices stronger than in the last decade," said David Berson, vice president and chief economist with Fannie Mae.

"Inflation annually will be about 2.5 to 3 percent a year and home price gains will average 5 to 6 percent annually. Historically, home prices have increased only a point or two above inflation. This is very good news for those who already own, but not good news for those who don't already own," Berson added during an interview last week.

Still, Berson cautions consumers against hasty buying behavior to get into a home before the boom booms and prices begin what could be unprecedented increases.

"I don't know that news like this should make consumers move precipitously. If prices increase 5.5 percent that probably won't mean if you don't buy today it will be unaffordable if you buy the next year or the year after," Berson said.

"Home prices will rise more than you've seen in the past, but not nearly as much as California, the Pacific Northwest and other parts of the country where we may see stronger price gains," he added.

Other experts generally agree with Berson and caution consumers about rash buying decisions, even in the face of a boom forecast with higher than normal price appreciation.

First that's because forecasts are, well, forecasts.

"I've eaten so much broken crystal ball glass. I've seen how this stuff can go into the crapper so fast. Somebody flies a couple of planes into the World Trade Center. In August of 1990, Saddam Hussein went into Kuwait. Ignore it all and just look at yourself," says Ray Brown a San Francisco real estate broker and co-author of three "Dummies" guides for home buying, selling and mortgages.

Beyond the fallibility of forecasts, Brown and other experts also say a home buying decision is too personal to base on forecasts -- for better or for worse. That's because buying a home is often the largest financial transaction many ever complete and the purchase should be considered holistically in the context of other financial plans -- retirement, sending kids to school, starting a business and other financial goals.

"The danger is that the housing sector has done well through the recession. Does that mean it's going to be immune from the cyclical changes in previous decades? No. Actually predictions like this make me think it (the housing market) could be close to a peak. I'm not convinced the recession is over. Base your home buying decision on your own personal situation and the realities of the local market," says Eric Tyson, a New England financial counselor who also co-authored several residential real estate "Dummies" guides as well as personal finance guides for "Dummies".

In California, the local market could compel buyers to speed up plans to buy. In some markets, a percentage point or two swing up could price borderline buyers out of the market. Larger swings could cut yet another rung off the ladder of affordability.

"If you plan to wait five years to buy a home, for whatever reason you have, then plan on making a lot of money. Take on a career path that will set the stage to handle big down payments and large mortgage payments. There's enough history in this valley to warrant that concept, just ask anybody who bought a home five years ago, or 10 or 50 years ago," said John Espinosa, a real estate agent with Seven Oaks Properties in Morgan Hill, CA.

"It's going to get more expensive, with the curve being more like a hockey stick rather than a smooth linear progression. The truth is, there just isn't enough housing to meet the demand, and that problem won't be fixed in five years. My advice, to all on-the-fence buyers, don't wait. If you can do it now, then do," Espinosa added.

Others say consumers who just can't buy a home may consider a brand of activism that could help their cause. Some housing inventory problems are generated by other activists, so called NIMBYs (not-in-my-back-yard), who fight against nearby, high-density, urban infill as an answer to lower density suburban sprawl. A grass roots movement of YIMBYs (yes-in-my-back-yard) could work to counter NIMBYs.

"Getting people to actively support additional housing development is the only real, long-term solution," says Terry Feingberg, president of Gilroy, CA-based Konnections, a community relations and public affairs consulting firm.

In Lincoln, MA, consumer real estate activist Bill Wendell says its also a good time for consumers to take up another brand of activism that supports efforts designed to prevent upward pressure on prices.

He says dual agency, weak disclosure laws, in-house financing from real estate brokerage firms, and other industry practices push up the cost of housing.

"While you cannot legislate away irrational exuberance, you can implement a number of safe guards to protect buyers from being manipulated," said Wendell, who back in 1995 founded the Cambridge, MA-based Real Estate Cafe, the first click-and-mortar housing information center which closed temporarily in 2000.

Copyright 2002 Realty Times