At some point I wrote that, in the last few years, I couldn't remember a single instance when I sold a property to a local buyer.
Most of my sales have been to foreign buyers. A few to out-of-state people, in search of vacation homes at the bargain prices seen since 2008 were the exception, but most of my buyers spoke French, Spanish, Portuguese, even Russian.
It's not only a question of "affordability". Mortgage Lenders are immensely more demanding nowadays that at the good times of the freewheeling loans, subprime programs, no-income-verification, negative amortization, you name it.
But that is just one point.
Confronted with the strict requirement of verifying a high income in order to be granted a loan, a typical middle class person, or family just does not meet these requirements.
People income has shrunk, or is stagnant at the best. Talking of salary increase is anathema in the new corporate culture, and would almost automatically blacklist the unfortunate employee who voices such an incongruous subject.
Sub-employment is also much more frequent. Or, to put it in other words, people do not get to work full time. They have flexible schedules, at the whim of their employers, which depend on the day-by-day needs of the corporation, not on the employee's need to pay a rent, a car bill, or a mortgage.
Then there is job security that is a thing of the past for the great majority. Taking a thirty or even a fifteen year term loan to buy a house is an audacity that needs a great amount of mad hope. You grow older and your chances of being retained due to an increased experience or skill are not very high.
To make it short, it's easier, simpler, and safer to just rent.
I read this article today. It confirms all the above.
It is not based on speculations, but on statistics.
After all, I wasn't so wrong.
From the South Florida Business Journal - Aug 13, 2013,
Housing affordability drops to lowest level in more than
four years
Only 69.3 percent of
houses sold in the second quarter were affordable to families with the U.S.
median income of $64,400.
There's a down side to the housing market's recovery: More
people now can't afford to buy a house.
Only 69.3 percent of new and existing homes sold in the
second quarter of 2013 were affordable to households with the U.S. median
income of $64,400, according to the National Association of Home Builders/Wells
Fargo Housing Opportunity Index.
That's down from 73.7 percent in the first quarter, and it's
the first time this housing affordability measure has fallen below 70 percent
since late 2008.
The median price of homes sold in the second quarter was
$202,000, compared with $185,000 for the same period a year ago, according to
NAHB.
"Home values are strengthening at the same time that
the cost of building homes is rising due to tightened supplies of building
materials, developable lots and labor," said NAHB Chairman Rick Judson, a
home builder from Charlotte, N.C.
"Together with rising mortgage rates, this contributed
to affordability slipping to the lowest level in more than four years,"
said NAHB Chief Economist David Crowe.
This problem could get worse, Crowe hinted, if Congress
limits the mortgage interest deduction as part of tax reform and ends federal
support for the secondary mortgage market, "both of which play enormous
roles in keeping home ownership affordable."
The most affordable major housing market in the U.S. was
Ogden-Clearfield, Utah, where 92.8 percent of homes sold in the second quarter
were affordable to families earning the area's median income of $70,800. The
least affordable major market? You probably guessed it -- San Francisco-San
Mateo-Redwood City, Calif., where only 19.3 percent of homes sold were
affordable, even though families there have a median income of $101,200.
Henry B. Nathan
is a Florida Real Estate Professional.
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