A new report out this month by the Center for Housing Policy indicates that the economic advantages of home ownership (part of the economic boom in housing construction that started in the 1990s and carried through the 2000s) may be better for the builders and sellers than for the millions of individuals and families buying homes.
The Center's website provides a nifty index, where you can examine whether the various professions are able to afford a median priced home in Nashville. I'll summarize and highlight: the Center found that in 2003 the median price of a home in Nashville was $139,000, while the annual income needed to purchase that home was $43,323. Basically, people "who provide the bulk of vital services" cannot afford or compete for homes at or near the median price. Nashville's elementary school teachers, police officers, nurses (LPN), retail sales workers, machinists, electricians, administrative assistants, paralegals, plumbers, social workers, customers service reps., auto mechanics and a host of others make annual incomes well below $43,323.
If you think it's not a problem for those moving out to the "cheaper" suburbs, guess again. The AP's Siobhan McDonough reports that, because of increased transportation costs, for every $1,000 saved in buying a surburban home, almost $800 dollars is lost to commuting costs.
You can't really assume that because housing construction and sales continue their decade long boom that times are great for home ownership. The value of homes is on the rise and outstripping the ability of people to pay for it. Salaries simply cannot keep up with costs. Unless something is done to close the gap between income and housing prices, then more and more people will be defaulting on their home loans, fewer and fewer families will be able to afford to purchase homes, and the boom will go bust.
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