NYT/Reuters: U.S. Home Prices Unaffordable for Many Workers: Study

[DeepModem Mom]

U.S. Home Prices Unaffordable for Many Workers: Study
By REUTERS
Published: January 10, 2007

CHICAGO (Reuters) - U.S. home prices may have dipped over the past year, but many American workers would still struggle to afford a median-priced home in major cities, a new study said on Wednesday.

"American workers are really not gaining ground and they're so far behind in the first place,'' said Barbara Lipman, research director for the nonprofit Center for Housing Policy, which conducted the study.

While the median home price in the 202 largest metropolitan areas declined 2 percent from a year ago to $248,000 in the third quarter of 2006, mortgage rates rose enough over the year that homes actually became less affordable as pay did not keep pace.

"The real story is what happened to salaries,'' Lipman said. ''Lower-paid occupations -- such as in retail, or home health workers -- their salaries went up only about 3 percent.''

The study found an annual income of nearly $85,000 was needed to afford the median-priced U.S. home....

http://www.nytimes.com/reuters/news/news-housing-affordability.html

[closeupready]

1. $85,000 to afford the median home???? That's astounding.

How many primary breadwinning people in the "median" US locale make even $50,000??? And THEN, those who can manage to do that get tax breaks on the mortgage. :mad:

[DeepModem Mom]

2. I agree -- an astounding statistic. nt

[dipsydoodle]

3. Tax relief

on mortgage interest went out of the window in UK years ago. It was fuelling house price inflation.

[closeupready]

6. And that's what it seems to do here in the US.

It is something which is considered a "factor" in assessing the costs of carrying a mortage. i.e., if you can bank on getting a break on the mortage interest, "you can afford more house! :) " :eyes:

[ixion]

8. and that's either with a large down-payment, or a (bogus) interest-only loan

It's a freakin' crazy market, if you ask me.

[ananda]

11. That's why I rent.

On my net 43k I could never afford to own a home these days.
But renting works best for me anyway... no overhead, landscaping
worries, or maintenance costs. Still.. it would be nice just to be
able to say I could afford to live well with many options.

[The2ndWheel]

4. Most of us aren't needed

If you're not an automated machine, a 6 year old in some country far away, or a lucky one who gets to use your brain like a machine, you're just in the way.

[no_hypocrisy]

5. It's easy to see why.

You give a gazillion dollars to some CEO screw-up or a Wall Street banker, who wants to buy a house. Because of the marketplace, his ability to spend more on a house (McMansion) and a yard, increases the value of his property and his neighbors' properties, the community, the region, etc. Now the "little guy" also wants to buy a house and a yard, but can't because of the new "market price" established by the CEO-homeowner.

[BluePatriot]

7. Well, duh

and what I hate is the attitude of my mother and some in her generation. "We had a house when we were your age...when are you buying a house? House house house!" And she went through the 80s bust! Argh! I could explain all the above to her but her eyes would just glaze over after ranting about personal responsibility or the like. Otherwise, I would not feel particularly pressured to get one...renting for now helps us sock away a good chunk of savings. But if kids entered the picture, we would be pretty screwed.

[ellie]

9. My dad was the same

way. He was still operating under 1950s prices.

[Ezlivin]

10. We couldn't afford the house we live in now if we had to buy it today

Here in the Dallas-Fort Worth Metroplex the housing market is going gang-busters. Just around the corner from our old, established neighborhood are a half-dozen developments, none of which offer any house for less than $500K. Just a couple of blocks further away is another development starting at $750K. And a mile beyond that is a development that has to be seen to be believed: All houses are a minimum of $1,200,000.

Our property taxes have tripled over the past 13 years. In a just a few years we will pay more for property taxes than we did for our mortgage. People are moving simply because they can no longer afford these taxes.