MSN: Average Joe still can't afford a home

[El Pinko]

http://tinyurl.com/6lzkvw

Average Joe still can't afford a home
Between 2000 and mid-2007, the median home price soared 64.9% to $229,200. The median income, meantime, rose just 16.6%. For would-be buyers, the math doesn't work.

One of the worst things about today's real estate market is that there doesn't seem to be any silver lining in that big black cloud.

Normally, you'd think dramatically falling prices would make homeownership possible for more moderate-income families.

But even with homes more affordable, the median price in many markets is still out of reach for a median-income family, according to "Paycheck to Paycheck: Wages and the Cost of Housing in America," a study by the Center for Housing Policy, or CHP, in Washington, D.C.

Comparing housing costs in 210 metropolitan areas with the wages earned by workers in 60 occupations, the study found that homeownership is often unaffordable for workers in each of the five-fastest growing occupations -- registered nurses, retail salespeople, customer-service representatives, food-preparation workers and office clerks. Registered nurses, who typically have high salaries, were unable to purchase a median-priced home in 108 of the markets.




...and yet we've still got politicians falling all over themselves trying to find ways of propping up bubble house prices...

[OKthatsIT]

1. Still? Has that really changed in the past 30 yrs?

After the Boomers(born 1945-1950) got the edge, everyone else got the hand-me-downs.

[Warpy]

6. The Boomers didn't have much of an edge

especially the older ones who entered their prime house buying years just in time for double digit interest rates. Construction screeched to a halt in the late 70s just like it is now, ghost towns of half finished houses in every city.

As for hand me down housing, guess again. The post boomer RNs I worked with all felt themselves entitled to--and got--new construction just on the edge between upper end suburban and McMansion. Most of the old boomers were like me, still stuck in apartments and trailers.

While they were doing that, I went from a trailer to a post WWII house in bad condition in a funky neighborhood. You want to talk about hand me down housing, start here. I was a pioneer, one of the few single women my age who bought a real house, but I was brought up to live within my means and that made all the difference.

The post Boomer cohort, those aged 30 to 44, will have a mixed experience in housing. If they got that starter house 10 years ago, they'll have a decent chance of keeping it. If they traded up to bigger and shinier houses every year and/or used their houses like ATMs, they're screwed.

In fact, so many of them are so screwed on overpriced housing that I can't stand to watch house porn on HGTV any more. I know all those nice young couples are facing sharply higher mortgage payments and probably foreclosure. It's just too sad.

But it aint hand me down housing, either.

[mrreowwr_kittty]

2. But people aren't going to sell their houses if they're going to lose money on them. nt

[izquierdista]

3. Of those 5 occupations

Don't RNs make the most? Aren't the other 4 categories lucky if they make more than minimum wage?

[BOHICA06]

9. Two incomes are the only hope ....

... and one that sucks too.

[PSPS]

4. A building full of 900 SF condos sits empty here because of the $650K price tag

Obviously, the builder still can't get his mind around reality. His head is stuck in the bubble!

Even with 20% down ($130,000), if you assume $2,000/yr in taxes, 6.5% 30-year fixed and $300/year for insurance, that's a whopping $3,500/month! To qualify for that loan today (no funny no-doc "liar loans" anymore), you'd need a houehold income of $120,000/yr plus the $130,000 in non-borrowed cash plus no other debt (credit card, car, etc.) whatsoever. If you have any other debt, you may need up to $150,000/yr household income to qualify for such a mortgage (monthly debt + mortgage payment usually must be < 40%.)

You can easily rent a 2BR plush apartment here (at least 900 SF) for no more than $1,500/month. Working backwards, that amount of money would get you a loan of $230,000.

Quite a disparity, isn't it? These condos have a real value of less than half of what they're asking. That's why people aren't buying.

Typically, the median price for housing in an area should be between two the three times the median income for the area. But you still see the majority of listings for five times the median income or more. And since people have to now prove their income, show tax returns, document their other debt and payments, the doors of mortgage lenders aren't being darkened much these days.

[tomtomtom]

5. live where you can afford to

I can't afford a home in most places...don't live there either.
life sucks, I want a home in Rio

[Warpy]

7. California went completely nuts

and when the monthly rent is significantly lower than the PITI, look out! You are simply not going to be able to get that dream price, kiss it goodbye and cut your losses.

Areas outside California that didn't see that level of insanity and whose rents are typically about 90% or so of the PITI are still good places to buy because we all know that rents are going noplace but up as people who have been foreclosed and evicted will flood into the rental market.

[unkachuck]

8. if the Average Joe....

....can't afford to buy a house, then there is no American Dream....right?