The housing problem in a digestable nutshell

[Phoebe Loosinhouse]

http://money.cnn.com/2007/06/13/real_estate/housing_costs_even_less_affordable/index.htm?postversion=2007061313
Study: Housing grows even less affordable
Even on the downside of the housing price peak, housing expenses are becoming more of a burden for Americans.
By Les Christie, CNNMoney.com staff writer
June 13 2007: 1:38 PM EDT

According to the 2007 State of the Nation's Housing report from the Joint Center for Housing Studies of Harvard University, 17 million of American households in 2005 were putting more than half their income into paying for shelter - a rise of 1.2 million from the prior year, and a jump of 3.2 million from 2001.
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Mortgage rates have generally been a favorable part of the equation. Since the start of 2001, they've ranged from an average of 5.23 percent for a 30-year fixed in June, 2003 to 7.16 percent in June of 2006. Even after the Federal Reserve started raising its rates in June, 2004, mortgage rates stayed low.

Median income, however, has dropped. Real wages fell from 2000 to 2005, according to the report. By 2006 household income was 1 percent below 1999 levels, according to stats from the Current Population Study of the U.S. Census Bureau.
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Single-family home prices skyrocketed, from an inflation-adjusted median of $154,563 in 2000 to $221,900 in 2006, according to the National Association of Realtors (NAR), for an increase of 46 percent.

It's not rocket science. Housing was artificially propped up by the low interest rates. Americans are now spending much more money on shelter. This is money they no longer have to put towards gas, education, consumer goods, savings, you name it. Alan Greenspan is the person I consider the head idiot - he should have slowly and consistently raised interest rates to tamp down the pressure on house prices and to encourage savings. We will all suffer for many years due to his malfeasance.

[Skink]

1. SF 2001.

the tyranny!!

[leftofthedial]

2. don't blame Greenspan

he was just doing what his owners in the oligarchy told him to do

he was a good soldier

[wildhorses]

3. kinda like goering?

:evilgrin:

[leftofthedial]

5. except for the belly

and the airplanes

[SeattleGirl]

4. This is why I wouldn't buy a home right now.

Not that I can; my financial situation is not such that I could. But the housing prices here in the Seattle area are so bloated, it's ridiculous. My neighborhood is okay, but it's definitely not in the upper middle half of the scale where income is concerned, EXCEPT for housing prices. The house on the corner sold a couple of years ago for $375,000, and it ain't all that.

It's absolutely insane, the cost of housing. Rent is also pretty bad (our landlord is pretty cool, though; compared to what we have, our rent is very reasonable). And now Seattle is turning into condo land. My daughter and SIL just had to move to a different apartment, because the building they lived in is being converted to condos. There was an article in the Seattle Times a week ago about how many people in the area are getting forced out because of condo conversion; they cannot afford to buy the converted units, but finding affordable rent is oftentimes very difficult.

The whole housing market has, I think, turned into a giant sham. Or, should I say SCAM?

[Double T]

6. wall street traitors/investors are always running a con game..........

moving from the dot coms to the housing market and so on. Interesting how THEY ALWAYS leave a trail of destruction and ruination behind them while THEY live like scumbag robber barons.

[Warpy]

7. The problem isn't the number of people who were suddenly

able to afford housing, the problem was a combination of speculators looking for a fast buck in an inflating market and the builders who overbuilt huge parts of the country, especially out west, to satisfy the spec market.

A lot of those houses are now coming onto the market all at once as the speculators are horrified at the prospect of losing paper profit or are having balloon mortgage payments kick in and need to unload.

This has been a problem in central NM where speculators accounted for 1/3 of the sales of new construction two years ago. It's also a problem in places like Phoenix, Las Vegas and all over California. Some streets in the newer developments had half the houses standing empty, owned by absentees who were waiting for them to appreciate.

What is happening now is not just market saturation, it's market inundation. A fall in prices is inevitable because the steam went out of the speculative market and there aren't enough potential home owners out there to move the inventory of empty housing stock, no matter if they are given interest free loans!