Home ownership too costly for many Americans

[Joseph Burkeson, CMI]

Talk about a friggin' mixed bag of crap, read this and all of the political rhetoric within.

Home ownership too costly for many Americans: study

By Patrick Rucker
Mon Jun 11, 12:23 PM ET

Home ownership will remain out of reach for millions of Americans, despite slumping house prices, unless low-income wages grow faster, according to a national housing study released Monday.

A record 37.3 million households, or one in three, were paying a "moderate cost burden" of 30 percent of their income toward housing in 2005, according to The State of the Nation's Housing 2007. The study said the number of households with that cost burden had risen roughly 20 percent since 2001, when interest rate cuts helped spark a U.S. house price boom.

Improving housing affordability would require an increase in low-income family wages, looser home building regulations and more spending from the federal government, the report said.

However, those changes are unlikely in the short term and many Americans are likely to be priced out of the housing market for some time, said Nicolas Retsinas, an author of the study and director of the Joint Center for Housing Studies at Harvard University.

"Home prices have flattened recently but we don't see return to widespread affordability," he said.

The recent crisis in the subprime mortgage market means borrowers with damaged credit will be unable to buy a home, which will prolong the housing slump, Retsinas said.

Weak income growth among lower-income households and restrictive land-use regulations will also worsen affordability problems, the report said.

"The recent uptick in (mortgage) interest rates is going to exacerbate the affordability challenges," Retsinas said.

While home ownership is out of reach for many Americans, the market must absorb the bloated inventory of unsold homes before it will return to health, according to the report.

"The clearest indicator of how much excess inventory exists is the 500,000-plus jump in vacant homes for sale between the end of 2005 and the end of 2006," the report states.

At the end of March, the portion of U.S. homes empty and for sale rose for the 10th straight quarter to a record rate of 2.8 percent, according to the Census Bureau said.

The housing report does not forecast an end to the current downturn but notes that strong immigration will brighten the long-term outlook for the housing sector.

"After contributing more than a third of net household growth between 1995 and 2005, new immigrants will likely account for at least that large a share between 2005 and 2015. The children of immigrants born in the United States will also add significantly to household growth," the report states.

The report will be available Monday afternoon at http://www.jchs.harvard.edu/son/.