Forum Post: Minimum Wage Home Owners
Posted 10 years ago on Nov. 3, 2013, 3:02 p.m. EST by ThomasKent
(131)
This content is user submitted and not an official statement
Should an American earning the minimum wage be able to afford to own a home?
The real estate markets (banks) want to see housing prices inflated to pre-2008 levels, which was artificially high to begin with. At this point there is no government agency regulating a limit on housing prices though there is a cap on the size of a federally financed home loan.
The median U.S. household income was $52,029 according to the 2008 Census. The median home price was $172,600. At the height of the bubble it took 473 percent of the median household income to purchase a median priced home. Compare this to 297 percent in 1975. The 2008 number is 331 percent.
The average 3 BR house in New York City is $.4.4 million. The President of the United States cannot afford to buy a 3BR house here on his salary alone. Yet it is within the power of government to change all of that.
"We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America."
Current guideline is that the cost of housing should be less than 40% of total income. This would require the median house prices to drop 30% to1975 levels to fit the median income today. How will that happen?
Usually housing data references statistics after 1970. This is when the U.S. Treasury and Federal Reserve disconnected the dollar from any connection to the gold standard. Consider two other periods of relative good economic times, 1950 and 1960
1950
Median household income: $3,319
Median home price: $7,354
Home price / income = Percent of 221
1960
Median household income: $5,620
Median home price: $11,900
Home price / income = 211 percent
If we use the 1960 ratio home prices today would need to be:
$50,029 x 2.11 = $105,561
A 38.8 percent drop from current levels. The data from 1975 to the current housing peak in the late 2000s shows housing prices going up for nearly 30 years. Many average Americans simply assumed this was the normal trajectory of home prices.
But the 1950 to 1960 example shows that after one decade, relative to income, home prices in 1960 were actually cheaper than they were in 1950. In 1960 the median home price cost about twice the median annual household income. Some can’t even imagine this number and think this would be ruinous for the economy. Nonsense from the banking industry.
Where is Bloomberg?
Dorothy Herman on Real Estate Market Video - Bloomberg
https://www.youtube.com/watch?v=j7IEFAVDrOE
Bloomberg Economist on Housing Outlook
https://www.youtube.com/watch?v=EiBHTwGDLH8
City Council goes after NYCHA foranswers
https://www.youtube.com/watch?v=kSC1Wx_Wuio
Mayor Bloomberg, NYCHA Announce Action Plan to Address Repair
From housing to healthcare the entire system is designed to extract the useful life out each worker then dispose of them as cheaply as possible.
Hey look facts!!
ALEC's still in your backyard!!!
http://thinkprogress.org/climate/2013/11/01/2873071/arizona-solar-battle/
Ain't (R)epelican'ts fun?
I've been super busy but yes I posted somewhere here about how APS had a "hit team" cook up contorversty in our commisioner race awhile back to get the people they wanted, now they are trying to get solar energy gutted through that hand picked team.
I wonder what kind of confusions it would take to fit that into the duopoly envelope?
It's funny how no one even tries.
I just saw a "concerned citizen" on tv telling me that everyone who uses the grid should pay for the grid, it have said solar energy is getting so cost effective that's it's starting to cut into our profits.
With solar cutting so deep into their profits, you have to wonder where they find the money for such costly advertising.
One thing to look at vis a vis these numbers is that 'household income' in the 1950's and 1960's was the result of fulltime work of ONE person. Currently a family needs two fulltime incomes to afford a home or anything else that used to be the result of one salary coming into the home. As Elizabeth Warren pointed out, a family that needs 104 paychecks a year is much more hard-pressed for failure should joblessness or illness hit.
if the buildings are empty
Those numbers are eye-openers. What American homeowners don't understand is how over-rated home ownership is in this country because it is such a rip-off. Wages are not enough to pay for homes, as you point out, and all the risk falls on the homeowner.
If a person puts 10% down on the home, then the bank technically owns 90% of the home yet the individual is paying for all the upkeep and maintenance and takes all of the risk. When housing prices dropped by as much as 50%, even if a homeowner only had 10% equity they had to take the entire percentage loss. It's insanity. Not many people can pay off mortgages anymore, yet they have all this risk while the banks walk away with all the money.
Our economic system should be set up to benefit the people, not banks, the wealthy and corporations.
Right.
Wall St is keen on creating economic bubbles. It buys low, inflates the price, and sells high. This is debt creation for the many and wealth creation for the few.
Good summation. And, hey, that's one of the reasons we Occupied Wall Street in the first place.
In 1960 a house cost $11,000 on the average. Today, 50 years later it costs at least 20 times more. That is doubling in price every 10 years. In a free market salaries should parallel the cost of housing.
When they don't government should intervene as regulator.
Wages have actually declined over the past 40 years while housing prices have skyrocketed. It's an unsustainable mix. Thanks for your important forum post.
Free markets are an impossibility.
You've been duped.
The people dont own their own money, and Congress is the only group that can regulate the Fed. The bailout money is inflating housing values again as we speak.