Population growth, deterioration of rural invironments, migration and fastrnurbanization rate affect the socio-economic development and settlement process of anyrncountry. The growth of population in developing countries is closely related to thernpattern of population distribution in relation to the resource base, wh ich also affectsrnrural-to-urban migration and the urbanization process. Urban poverty, unemployment,rninadequate housing, and the prol iferation of squatter settlements along with other urbanrnproblems, further aggravate the severity of urbanization problems in Third Worldrncountries, including Ethiopia.rnThe malaise of rapid urbanization in many developing countries is evident inrnrapid growing of unauthorized settlements, the deterioration in many public services, thernextreme shortage of housing, pressure on public facilities , and overcrowding in transportrnand so forth . It is often accompanied by increased unemployment and a worsening ofrnincome disparities. Urban growth, if not effectively managed, results in class conflicts,rnfrustration and hatred between "haves" and "have nots" which eventually can lead tornpolitical upheaval and chaos.rnThis paper examines prob lems related to rapid urbanization, housing problemsrnand squatter settlements around Nazareth. It also considers the causes for the origin andrnfast development of the squatter settlements with their future prospects.