"In many parts of the country, housing increases have outpaced wage growth for almost a decade. Census data released in 2006 revealed that between 2000 and 2005, the burden of housing costs grew sharply," according to a Bankrate.com article.
The article cites a recent study done by the Center for Housing Policy (CHP) called "Paycheck to Paycheck: Wages and the Cost of Housing in America." The study looked at 210 U.S. metropolitan areas and the wages earned by workers in 60 different occupations.
"Registered nurses, who typically have high salaries, were unable to purchase a median-priced home in 108 of the markets," according to the article. "The study also found that retail salespeople and food-preparation workers couldn't afford to rent a two-bedroom apartment in any of the markets. It based affordability on the metrics that a family or person should not spend more than 30% of household income on rent and utilities while homeowners should not spend more than 28% of their income on the mortgage, taxes and insurance."
Also according to the article, "The Housing Affordability Index measures the cost of housing against median family income. The National Association of Realtors, or NAR, which calculates the index, considers that the typical family makes enough money to buy the typical used home, assuming a 20% down payment and a traditional 30-year mortgage.
"In 2000, the NAR pegged the index at 129.2, meaning the typical family had 129% of the income necessary to pay for the typical used house. That figure dropped to 104.9 in June 2007, even though the 2000 median family income of $50,732 rose to $59,157 during the period.
"That's because the median price of a home in 2000 was $139,000, but by June 2007 prices peaked at a whopping $229,200. In those seven years, the median price of homes increased 64.9%, while median incomes rose just 16.6%."
Labels: Housing
