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Forum Post: Minimum Wage Home Owners

Posted 12 months 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.

http://www.mybudget360.com/buying-a-home-in-america-today-is-expensive-thanks-to-the-banking-sector-examining-income-and-home-prices-from-1950-to-the-present-can-home-prices-fall-another-38-percent/

"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

https://www.youtube.com/watch?v=uLmAniHfOkw

15 Comments

15 Comments


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[-] 7 points by factsrfun (6476) from Phoenix, AZ 12 months ago

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.

[-] 0 points by shoozTroll (17632) 11 months ago

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?

[-] 1 points by factsrfun (6476) from Phoenix, AZ 11 months ago

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.

[-] 0 points by shoozTroll (17632) 11 months ago

I wonder what kind of confusions it would take to fit that into the duopoly envelope?

It's funny how no one even tries.

[-] 1 points by factsrfun (6476) from Phoenix, AZ 11 months ago

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.

[-] 0 points by shoozTroll (17632) 11 months ago

With solar cutting so deep into their profits, you have to wonder where they find the money for such costly advertising.

[-] 3 points by mrbadexample (15) from Brooklyn, NY 12 months ago

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.

[-] 2 points by MattLHolck (16833) from San Diego, CA 11 months ago

if the buildings are empty

[-] 1 points by beautifulworld (21543) 12 months ago

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.

[-] 1 points by ThomasKent (131) 12 months ago

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.

[-] 1 points by beautifulworld (21543) 12 months ago

Good summation. And, hey, that's one of the reasons we Occupied Wall Street in the first place.

[-] 2 points by ThomasKent (131) 12 months ago

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.

[-] 1 points by beautifulworld (21543) 11 months ago

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.

[-] 0 points by shoozTroll (17632) 12 months ago

Free markets are an impossibility.

You've been duped.

[-] -1 points by HCHC4 (-28) 12 months ago

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.