20 years later, buying a house is less of a bite
NEW YORK -- Jan. 10, 2006
Most homeowners contribute less of their income to housing than the previous generation did, but real estate prices are widely considered to be more expensive than ever. Despite the escalation in property values, most housing markets -- with some exceptions, such as Miami, coastal California, New York, and the District of Columbia -- have remained largely affordable thanks to deeply declining mortgage rates since the 1980s and increasing incomes.
Nationally, a family that earns the median income would have to contribute 22 percent of their pre-tax income to mortgage payments in order to afford a median-priced home this year, according to research firm Moody's Economy.com.
Although housing prices continue to rise, the decline in mortgage rates and fees has made housing more affordable for homeowners these days. In the early 1980s, the percentage of income needed to afford a home rose to more than 30 percent; and since hitting a low of 17 percent in 1998, the share of income required to purchase a home has been creeping back up due to the sharp increase in prices.
Leonhardt, David; Rich, Motoko
© Copyright 2006 Bethesda, MD
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