MSN: Why you might never own a home

[El Pinko]

http://finance.sympatico.msn.ca/savingsdebt/insight/article.aspx?cp-documentid=6052691

Why you might never own a home
Houses used to be an essential part of the North American dream. But for many middle-class families, a home of one's own now seems out of reach.


By Lauren Barack
January 22, 2008

....

"We can't afford to buy a home," she says. "Housing costs are so high that we haven't really thought about it -- although I do more often now that I have a daughter."

....

Across the U.S., housing prices have risen on average about 45% over the past six years, according to the National Association of Realtors, a trade organization. (That rate of increase is now slowing, mostly because of the mortgage-lending crisis.) Home prices in Canada, meanwhile, climbed about 68% between 2000 and 2006 (figures for 2007 aren't yet available), according to the Canadian Real Estate Association (CREA).

By contrast, the median income for U.S. working-age households (those headed by someone under 65) is down 4% since 2000, according to an U.S. Economic Policy Institute analysis of Census Bureau data. That's a drop of about $2,400 a year.

The pain is evident not just in pricey urban areas like San Francisco and New York City, but even in spots like Scottsdale, Ariz., where 55-year-old Linda Sirois frets that her son's generation won't be able to mirror her own family's success.

[n2doc]

1. if they got rid of the easy money this would not be a problem

The only reason prices went up so much was because people got easy access to vast amounts of money. Money they could not afford to pay back. And the only cure is for prices to go down to a balance with incomes, or for incomes to go up to balance prices. About a30% swing either way.

Frankly, home loans should be mandated as fixed rate, 15-20% down, with demonstratable income. Not everyone is going to get a home under those conditions. . But this would make it as sure as possible that those who did meet the requirements would be able to keep the home.

[Yavin4]

10. If You Mandated A 15-20% Down Payment, Housing Prices Would Plummet

Because only a tiny fraction of the public would be able to have that kind of money in their bank accounts, and if housing prices plummet, then the entire economy plummets.

[THUNDER HANDS]

2. on long island small houses, like 1 br, 1 bathroom, are $400,000+

yeah, I'm never owning.

[stray cat]

3. 700 square feet no frills condo in this region goes for >400,000

I only need to have $80,000 saved up for a downpayment....

[TwilightGardener]

4. Plenty of affordable homes here in the midwest!

[stray cat]

5. Definitely - but no available jobs for my training...

[distantearlywarning]

6. Depends on where you live.

People making minimum wage could afford to buy a home in my city, no joke.

[El Pinko]

7. In most cities, people making minimum wage can't even rent a studio without doubling up.

I don't think there is ANY city or town in the US where a minimum wage worker could ever possibly buy a home. I don't know if there ever was.

[distantearlywarning]

8. Pittsburgh, Pennsylvania

The median home price here is only slightly over $100K. It is quite possible to buy a small condo or even a single family home in a safe, working-class (but not upscale) neighborhood for under $50K, perhaps even $30K.

Here is an example - small, probably needs lots of work, but looks liveable, and is probably structurally sound. 2 bedroom, 1 bath, $29K, in a mid-range neighborhood with a blue-collar family base and low to mid-range crime rates.

http://www.prudentialpreferred.com/property/index.cfm?fuseaction=propertymls&MLS=712228

Mortgage payments on this property, with no money down, and a 6.5% interest rate come out to $183.30 per month. If you go by the standard that people should pay no more than 30% of their wages to their mortgage, that works out to a max of $314 for someone making 6.55 and working 40 hours a week. So this house is definitely do-able for 1 person making minimum wage. There is no doubt that the owner would have to do some sweat equity to make something really decent of the property, but they could still afford it making minimum wage.

[El Pinko]

11. Minimum wage is $12K per year, GROSS. It would be pretty hard to save up a down pmt

or make those monthly payments or get approved for a loan on that. That is an amazingly cheap house, though. El Paso is cheap, but you would be hard-pressed to find something THAT cheap here.

As for condos, there is the cost of association fees to consider.


I still think that housing markets where a minimum-age worker could buy a home are rare indeed. Maybe Detroit might have a few offerings in that range, too.

[Arctic Dave]

12. 12,000 a year

Most banks won't even let you in the door, much less give you a loan for a house. Hell, I don't you could find a place in Mexico with that kind of money. Unfortunately.

[StarryNite]

9. Even in spots like

"Snobsdale", Ariz.? Who woulda thunk it?