Across Nation, Housing Costs Rise as Burden

[cal04]

The burden of housing costs in nearly every part of the country grew sharply from 2000 to 2005, according to new Census Bureau data being made public today. The numbers vividly illustrate the impact, often distributed unevenly, of the crushing combination of escalating real estate prices and largely stagnant incomes.

While many of the highest home values were on the coasts, in places like Southern California and Manhattan, many of the biggest jumps in the percentage of people paying a burdensome amount of their income for housing occurred in the Midwest and in suburbs nationwide, making it clear that the housing squeeze has reached deep into the middle class.

In New York City, more than half of all renters now spend at least 30 percent of their gross income on housing, a percentage figure commonly seen as a limit of affordability. In Staten Island, the percentage paying at least 30 percent of income jumped to 60 percent, up from 40.

Among suburban homeowners, there were big increases in the percentage of people with mortgages spending at least 30 percent in places like Loudon County, Va.; Morgan County, Ind.; Nassau County, on Long Island; and Bastrop County, Tex.

http://www.nytimes.com/2006/10/03/nyregion/03census.html?hp&ex=1159848000&en=2df214d07ab7ad5f&ei=5094&partner=homepage

[Alcibiades]

1. Get out while you can

I heard a realtor on an ad on the radio here in the triangle saying something along the lines of "Real estate prices in our area are not inflated, but are priced according to demand. There is no bubble, today's a good time to buy: of all the homes in Chapel Hill sold last year, over half sold for under $525,000." It's a sign of the massive disconnect between realtors and average people in the area that they rattle off $525,000 like it's no big deal, something any middle class family can afford. Of course, they also failed to mention that this is an arbitrary cut point, which probably means that over half the homes in Chapel Hill that sold last year went for half a mil. The ad continued "The fundamental reasons for pricing in Chapel Hill are not going away--the University isn't shutting down...." etc. No acknowledgment that this is the south, and, even in a preppy wanna-be place like Chapel Hill, prices in this range have no historical precedent.

If you own overvalued real estate, you know it. Sell it now and cut your losses. Or, if you don't care about losing money on paper, just hold onto it. Either one of two things will happen: prices will have to fall to be more in line with incomes, or millions on the coasts will have to move to Missouri, where you can get a decent family house for under $200,000.