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As the housing market slowly recovers, a majority of homeowners and renters are finding it hard to meet rising rents and mortgage payments, new research finds.
As the housing market slowly recovers, a majority of homeowners and renters are finding it hard to meet rising rents and mortgage payments, new research finds.
"Affordability issues are real and a major hurdle," says Lawrence Yun, chief economist at the National Association of Realtors, an industry group. Home prices have increased 20% over the past two years while wages have barely gone up, he says. "Only by adding more new supply, via housing starts, can home prices be tamed," Yun adds. In fact, construction of housing units has averaged around 1.5 million a year for the past five decades, he says, but it's likely to be less than 1 million in 2014.
What's more, at least 15% of American homeowners (or residents of 78 counties across the country) were living in housing markets where the monthly mortgage payment on a median-priced home requires more than 30% of the monthly median household income - long considered the maximum for rent/mortgage repayments. Housing costs above that threshold are "unaffordable by historic standards," says Daren Blomquist, vice president at real estate data firm RealtyTrac. In New York county/Manhattan, mortgage payments represent 77% of the median income and in San Francisco County represents 70%.
Comment: Shift of the ground is the likely cause of the tilt (see video). Here is the Sott worldview of sinkholes during last year alone.