Are you House Poor?
having the 2.3 kids, the cushy corporate job and the stylish car to drive
to work everyday are part of the myth, too, but nothing quite summed up
Americana quite like the white picket fence. But if recent economic numbers
are any clue, this dream is becoming a nightmare for many in the US.
According to date released by the United States Census Bureau, an
increasing number of homeowners are spending a larger and larger amount of
their incomes on housing than in previous years. People in 49 out of 50
states reported an increase. The only state that didn’t, Alaska, spent the
same amount. The report showed that people are spending around 21 percent
on their housing needs , up from 19 percent in 1999.
This is a huge problem for first-time buyers who may now be priced out of
housing markets all across the country. Economists point to rises in home
prices in the last 7 years, as well as higher interest rates, coupled with
stagnant wages over the same period.
While everyone seems to be in agreement that the housing “bubble” is either
bursting, or getting ready to burst depending on where you live, housing
prices are still up a remarkable 32 percent since the beginning of the
decade.
Household incomes, on the other hand, haven’t done a very good job of
keeping up. The same Census report showed that income has actually dropped,
not risen, over the past 7 years, down 2.8 percent.
Maybe the worst news in the report was the percent of people who allot more
than 30% of their income for housing. The numbers are up almost 8%.
National guidelines suggest that more than 30% of household income for
housing is excessive and not financially healthy.
What does this mean in the long run?
Most experts agree that until income can catch up to housing, the real
estate market will remain lifeless. And since real estate is one of the
biggest drivers to the overall economy, a weak real estate market means a
weak economy.
Things appear to be the worst in California. Not only do they have the most
expensive real estate in the nation, 48 percent of California homeowners
spend more than 30% of their income on housing related costs.
Until income can begin to grow as quickly as the real estate market, this
trend shows no signs of slowing down. Which could mean that the upcoming
real estate slump could last much longer than anyone predicted.
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- Is Renting The New American Dream? « Urban Engagement Webcity
- My Timothy Leary Post « my life behind the white picket fence
- Don’t Panic! The Bill that kills the American Dream | TALKABOUT
Tags: 50 States, Census Bureau, Census Report, Corporate Job, Economic Numbers, Economists, First Time Buyers, Good Job, Great American Dream, Household Income, Household Incomes, Housing Bubble, Owning A Home, Previous Years, States Census Bureau, Stylish Car, United States Census, United States Census Bureau, Wages, White Picket Fence