Richard Tafoya
Jun 13th, 2007, 06:44 PM
CNN:
http://money.cnn.com/2007/06/13/real_estate/housing_costs_even_less_affordable/index.htm?postversion=2007061313
Home prices may have fallen this year, but a new study says housing has become more unaffordable. And if interest rates continue to rise, the balance could tip even further.
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.
"There's an ongoing affordability problem - and it's getting worse," Rachel Drew, a research analyst with the center, said at a conference earlier this week in New York.
Three main factors intersect to affect affordability: mortgage rates, income and prices.
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.
http://money.cnn.com/2007/06/13/real_estate/housing_costs_even_less_affordable/index.htm?postversion=2007061313
Home prices may have fallen this year, but a new study says housing has become more unaffordable. And if interest rates continue to rise, the balance could tip even further.
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.
"There's an ongoing affordability problem - and it's getting worse," Rachel Drew, a research analyst with the center, said at a conference earlier this week in New York.
Three main factors intersect to affect affordability: mortgage rates, income and prices.
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.