Seattle Times Asks: Who Will Lead On Housing?
The Times today features a special report on housing, with a graphic that I found particularly pertinent.
Does anyone think that is a good sign? Bubble or not, housing is becoming more and more of a problem. Is it the federal government's fault, or is it on them to "fix it"? The article attempts to tackle these questions.In the past five years, real hourly wages have grown by only 2 percent while the median home price has increased by 52 percent. Though homeownership levels are currently high, a good portion is due to the use of highly leveraged mortgage products, a risky proposition in a rising interest-rate environment.
King County has experienced a comparable run-up in prices, and the Census Bureau's American Community Survey shows that county household income actually declined from 2003 to 2004.
The consequences of these market dynamics are dramatic. According to the nonprofit Center for Housing Policy, more than 14 million households in the country — one out of every eight, or 12.5 percent — now pay more than 50 percent of their income for rent or mortgage payments and/or live in physically dilapidated housing. In King County, it's higher — 14 percent.
(Bruce Katz & Michael Stegman, Seattle Times, 09.22.2005)
4 comments:
In the past five years, real hourly wages have grown by only 2 percent while the median home price has increased by 52 percent.
As painful as it may be now, this is a good sign--that a price correction is in order; it's still sad that people bought high. That said, more homebuyers should've done serious homework.
Housing prices do not support themselves (eh, unless propped by credit-driven speculation). Wages drive housing prices--big correction coming!
Something to support my point:
http://tinyurl.com/a7g3z
Not sure how this is the governments responsibility, other than the Fed keeping the credit tap open too long. As reskeptic notes, the correction is coming, but patience is needed.
If you talk with folks, many still don't seem to get it. I have a co-worker that wants to move back to the southwest, but keeps delaying putting his house in Seattle on the market. Now he wants to wait to next spring, I keep telling him that prices have peaked and now is the time to sell.
How many of you folks who are convinced we are at the peak, and are sitting atop a fragile bubble, own your own house?
How many of you folks who are convinced we are at the peak, and are sitting atop a fragile bubble, own your own house?
Does that really matter? Does renting somehow nullifies their concerns--or those who "own" (or rent money) somehow have a truer take on reality?
Yes, we own--so what?
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