Runaway Train
Housing data in today's paper provided tangible
proof of a trend I have long noted anecdotally.
Here in southern California, only 26 percent of
households can afford median-priced homes. The
purchase of a median-priced house at today's
average interest rates, with a 20-percent down
payment, would require an annual income of
approximately $85,000. Considering the fact that
such an income is out of reach for a great many
people, and fewer still can afford to put 20
percent down, it's no wonder that so few people can
afford to become homeowners in this overinflated
state.
Admittedly, I write this with more than a touch
of bitterness, since I am one of those millions who
can't afford to buy a home. Not so long ago, I
brought home a great salary and lived in a condo
with a $2,200 rent payment. I look back on those
days and kick myself for not jumping on the runaway
real estate train at a time when I could have
successfully made the leap. Now, I bring home less
than half of what I used to make, and cannot afford
to get into a market where the median home price
floats around $400,000.
With so little affordable housing out there, and
the economy ostensibly still doing so poorly, I
wonder who are the buyers continuing to blow hot
air into this ever-expanding bubble. Equity in
existing homes has of course also increased, so I
imagine many of these homebuyers are existing
homeowners "trading up" into bigger and more
expensive homes. If one got into the real estate
market as recently as a year or two ago,
opportunities abound, thanks to ever-increasing
home values. But for those left behind at the
station, this crazy train is moving too fast to get
onboard.
©2003 Michael
Strickland ALL RIGHTS
RESERVED
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