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Is “Affordability” Becoming a Fantasy? U.S. Home Affordability Drops to 8-Year Low

Thu Apr 20, 2017 by on Florida Law News

Miami skyscraper

photo credit: newbuild.us

It bothers me every day that the cost of going to college has increased eight-fold from when I went to school – that’s right 800% –  yet work-study wages have only doubled from the time I mopped floors and loaded dishwashers. What does that say about affordability in general? And particularly, one’s ability to pay for housing.

With the March jobs report showing a considerable pullback in job growth compared to January and February, its effect on the already slow economic recovery is having far-reaching implications. Coupled with rising mortgage rates, inflation and home prices, “affordability” is becoming a scarce term especially when it comes to the housing market.

First Responders Find It Unaffordable To Live Where They Work

As a Trulia study noted, affordability is defined as a household spending no more than 31% of its monthly income on housing, assuming a down payment of 20% and a 30-year fixed-rate mortgage at current interest rates. The study pointed out that in America’s largest metropolitan areas, the cost-of-living has far exceeded what many workers in those cities can afford. No kidding. This is particularly problematic for first responders who must report to work on short notice, such as police officers and firefighters, where less than 20% in half-a-dozen major U.S. metropolitan areas can afford a home in their respective city of work. In San Francisco and San Jose, California, first responders could not afford over 90% of homes in those cities. This is a problem that is not going away.

Related Scraps Major Condo Project in Miami

Closer to home, the recently scrapped 298-unit Auberge luxury condo project by Related Group, located in Miami’s Arts & Entertainment District, gave us blatant evidence that a slow-down in the housing market is taking form. Related Group, South Florida’s largest condo developer, admitted that “taking a breather” was the best course to adjust to the slowing luxury condo market. Indeed, sales prices in downtown Miami have even slid 1.2% since 2014.

When it comes to wages, ATTOM Data Solutions released figures showing that since 2012, 96% of counties analyzed in their report have seen home prices rise at a faster pace than wages. An earlier report showed that U.S. Home Affordability has dropped an 8-year low citing the same combination of fast home price appreciation and slower wage growth.

I say hold on to your hats as we start on a new turbulent roller coaster ride that has downward trajectory.

From the trenches,

Roy Oppenheim

One response to “Is “Affordability” Becoming a Fantasy? U.S. Home Affordability Drops to 8-Year Low”

  1. Michael says:

    Once again, this comment will be erased like the last time I left a taste of reality in a polite manner but here goes>> The Fed and the Banksters have fraudulently held down interest rates for over 100 months to suppress the effects of all the fraud and gambling on wall street . A 50 year low in home ownership rates also combined with the inflation we are starting to finally see from all the QE programs, overtly and covertly done, leading to bubbles in Rent, Housing and Multi Family complexes, stock market bubbles, student loan bubbles, auto loan bubbles, consumer debt bubbles and the largest bubble of all> BONDS.. For this article, we are talking Real Estate, so what we have is institutional investors that came in and bought everything up at low to zero % interest rates and then small investors bought tons of stuff up. The large institutions and builders started an unprecedented building spree of multi family apartment complex’s all over the nation, especially in SW Florida where I am!! The amount of single and multi family has far exceeded the insanity from the last 07/08 debacle, and when this bubble pops, it will create huge amounts of Havoc.. Numerous amounts of existing Apartments have recently sold at highly inflated prices based on the highly inflated rents, so when the rents and markets fall, all thee complex’s will be under water and rents will go to half or less and so will properties, single and multi family.. Fisher at the Fed told the world that they got the economy high on cocain and heroin and are keeping alive on Ritalin, people shold have listened, but they don’t !! This is what happened when you try and cover up and smooth over the fraud on wall street and let the Federal Reserves manage the economy for the banksters. Free Markets cannot distort this bad with out correcting, but since we do not have free markets, and no one wants the correction to happen, or the games to end, the imbalances are astronomical and the bubbles popping at different times will be so too.. The Bankruptcy and Foreclosure lawyers will be so busy again, they won’t see vacation times for years..lol

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