Will the Bubble’s Burst Make Housing More Affordable?

johnnymk · 02-04-2008, 10:38 PM

http://www.newwest.net/topic/article...dable/C61/L36/

By Robert Struckman, 2-04-08

If you work for a living and shopped for a house anytime in the last six years, I suspect that you felt a little intimidated by the constantly rising prices.

That has always been the downside of the housing boom, right? (That and the fact that our entire economy seems to be teetering as a result of its demise. I mean the bubble going “blam” seems to be scaring Federal Reserve Bank Chairman Ben Bernanke so bad he’s dropping interest rates faster than his, well, I’ll leave that metaphor to your imagination.)

So now that prices have dipped, has housing become easier for working people to afford? That question led Washington, D.C.-based Center for Housing Policy to produce a study, released late last week, which concluded: it has made a difference, but not much.

The real problem, said researcher Maya Brennan, is that home prices and rents have increased at much faster rates than wages in recent years.

“Look at the gap between median home prices and annual salaries in various occupations. It’s so huge,” Brennan said.

In 12 Mountain West markets included in the report (there were none in Montana or Wyoming), Brennan said, only three had homes that would be affordable to registered nurses, which is one of the fast-growing occupations studied in the report.

“The situation does not look particularly good for workers in your area,” Brennan said.

Even if housing prices continue to drop, working people may still find it hard to get into a home because of the national credit crunch.

zippyjuan · 02-04-2008, 11:01 PM

In San Diego, housing prices are down 13% from year ago prices. But the median priced home is still only affordable by something like fifteen percent of the population on a single income. They have a VERY long ways to fall for someone like a nurse to be able to afford one. I was lucky enough to get in before the hyperinflation kicked in.

ShawnLee · 02-04-2008, 11:02 PM

I think other side of it though is that for as much as houses may have been overpriced, they're still higher than when the rise started. And I would assume that this is the case even when adjusted for inflation.

Daedalus · 02-05-2008, 12:22 AM

True, we are still much closer to the peak than to the trough. Case-Shiller graphs are very enlightening. Ultimately, affordability is the issue. The unwinding of the levered debt over the next few years will be spectacular.

Chgoman · 02-05-2008, 08:17 AM

Actually across Southern California, including San Diego, I'm seeing home prices down about 20% on average. Depending on where you are there are some areas where it is closer to 5% and some areas where I'm seeing 30%. Depends on what you are looking for and what area.

CornMonkey · 02-05-2008, 09:56 AM

I am one who is finally looking to purchase my first home. More likely, I will test the waters early summer and hope to get the papers signed by end of summer/early fall.

My wife and I have been watching home prices fall over the past year or so and feel this year may be the year to finally take the plunge. Homes in the San Fernando valley (Encino, Tarzana, Canoga Park, Northridge, etc) are getting affordable for us. To get even more bang for our buck, we might even look toward looking as far as Sylmar.

It would be nice to have mortgage rates drop a bit more tho...

Maarchk · 02-05-2008, 12:31 PM

yeah see, this lowering of rates and trying to save people is a bad thing for people who were not irresponsible. lowering rates means that people might still afford houses that are probably too expensive so their value will not lower to appropriate levels. And bailing people out means that they don't have to sell and again the house does not drop to its proper value. Did that law or action happen? There was big stink about it but i never saw it all go through. Did that and the rebates thing go together?

02-04-2008, 10:38 PM	#1
johnnymk Chief of Naval Operations Join Date: May 2000 Location: LEVITTOWN< PA> USA Posts: 13,621	Will the Bubble’s Burst Make Housing More Affordable? http://www.newwest.net/topic/article...dable/C61/L36/ By Robert Struckman, 2-04-08 If you work for a living and shopped for a house anytime in the last six years, I suspect that you felt a little intimidated by the constantly rising prices. That has always been the downside of the housing boom, right? (That and the fact that our entire economy seems to be teetering as a result of its demise. I mean the bubble going “blam” seems to be scaring Federal Reserve Bank Chairman Ben Bernanke so bad he’s dropping interest rates faster than his, well, I’ll leave that metaphor to your imagination.) So now that prices have dipped, has housing become easier for working people to afford? That question led Washington, D.C.-based Center for Housing Policy to produce a study, released late last week, which concluded: it has made a difference, but not much. The real problem, said researcher Maya Brennan, is that home prices and rents have increased at much faster rates than wages in recent years. “Look at the gap between median home prices and annual salaries in various occupations. It’s so huge,” Brennan said. In 12 Mountain West markets included in the report (there were none in Montana or Wyoming), Brennan said, only three had homes that would be affordable to registered nurses, which is one of the fast-growing occupations studied in the report. “The situation does not look particularly good for workers in your area,” Brennan said. Even if housing prices continue to drop, working people may still find it hard to get into a home because of the national credit crunch.

02-04-2008, 11:01 PM	#2
zippyjuan Picture of the Day Guru Join Date: Oct 2002 Location: Sunny San Diego Posts: 8,756	In San Diego, housing prices are down 13% from year ago prices. But the median priced home is still only affordable by something like fifteen percent of the population on a single income. They have a VERY long ways to fall for someone like a nurse to be able to afford one. I was lucky enough to get in before the hyperinflation kicked in. __________________ I add new pictures to my photo gallery pretty regularly. You can see them here if you are interested: http://www.pbase.com/jeffryz

02-05-2008, 12:31 PM	#7
Maarchk Rear Admiral Upper Half Join Date: Jul 2000 Location: Where the east meets the west. Posts: 3,066	yeah see, this lowering of rates and trying to save people is a bad thing for people who were not irresponsible. lowering rates means that people might still afford houses that are probably too expensive so their value will not lower to appropriate levels. And bailing people out means that they don't have to sell and again the house does not drop to its proper value. Did that law or action happen? There was big stink about it but i never saw it all go through. Did that and the rebates thing go together? __________________ "The girl is crafty like ice is cold." "I left my heart in san francisco... And my liver at Moe's Tavern." A real friend is one who listens to you as much as they talk to you.

Thread Tools	Search this Thread
Show Printable Version Email this Page	Search this Thread: Advanced Search
Display Modes
Linear Mode Switch to Hybrid Mode Switch to Threaded Mode

02-05-2008, 12:22 AM	#4
Daedalus Lieutenant Commander Join Date: Dec 2002 Posts: 824	True, we are still much closer to the peak than to the trough. Case-Shiller graphs are very enlightening. Ultimately, affordability is the issue. The unwinding of the levered debt over the next few years will be spectacular.

02-05-2008, 08:17 AM	#5
Chgoman Lieutenant Commander Join Date: Apr 2002 Location: Mission Viejo, CA Posts: 696	Actually across Southern California, including San Diego, I'm seeing home prices down about 20% on average. Depending on where you are there are some areas where it is closer to 5% and some areas where I'm seeing 30%. Depends on what you are looking for and what area.

02-05-2008, 09:56 AM	#6
CornMonkey Rear Admiral Lower Half Join Date: May 2000 Location: in front of my computer Posts: 2,503	I am one who is finally looking to purchase my first home. More likely, I will test the waters early summer and hope to get the papers signed by end of summer/early fall. My wife and I have been watching home prices fall over the past year or so and feel this year may be the year to finally take the plunge. Homes in the San Fernando valley (Encino, Tarzana, Canoga Park, Northridge, etc) are getting affordable for us. To get even more bang for our buck, we might even look toward looking as far as Sylmar. It would be nice to have mortgage rates drop a bit more tho...

User Name
Password
Remember Me?