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To: Ilaine who wrote (96512)	4/19/2001 6:36:09 PM
From: s-words	Read Replies (2) \| Respond to of 436258

Interesting data...<<and if houses are unaffordable why do more people own them than ever? >> Monthly income data is hard to compare due to the higher percentage of 2-income families now vs. 1965. Unless you're talking per-capita instead of household income.

To: Ilaine who wrote (96512)	4/19/2001 7:32:29 PM
From: Skeeter Bug	Read Replies (1) \| Respond to of 436258

cb, lots of data. i just want to make sure we are both clear. i said that housing costs, on avg, have risen more than wages. let me clarify a few points lest there be an misunderstanding. 1. we're talking comparable homes. eg, if the condo / sf home ratio has changed then the statistics need to be adjusted. otherwise, it is apples to oranges. 2. i'm not talking household income. the avg worker per household has increased in the early 70s. to avoid an unlike comparison, we can't use household income without lowering to take away the impact of more workers per household. 3. i'm not including the impact of interest rates, i'm just taking in to account purchase price. i also don't include property tax and assume tax liability changes - which impact money available - are negligible. 4. i'm not talking about % of home ownership. >>I don't think 17% of monthly income is a staggering amount to pay for housing<< first, this isn't new home buyers. this represents people that purchased homes 29.5 years ago, too. if you want a much better indicator of the cost of home ownership now compared to the past then you'd have to compare the % of income spent on NEW mortgages now compared to then. this is where the rubber hits the road. this is the data that would prove the point. >>25% used to the rule of thumb to qualify for a mortgage<< now it is 30%. and they'll let you go to 40% in some cases. b/c housing is so "cheap" now ;-) >>and if houses are unaffordable why do more people own them than ever?<< you can't think of any reasons? here's a few: 1. more spouses work, increasing household income and enabling the family to purchase a home when they otherwise could not have. 2. households reduce their savings rate to afford homes. 3. households take on debt to afford homes. easier access to debt. remember any 0% down, 120% debt to equity ratio offers from the 70s? 4. there are more condos and "affordable" housing now (remember, you can't compare a luxury 1970 home to a 2001 condo and call it valid analysis). 5. potentially lower interest rates (don't know for sure). these are just a few. the reasoning that more people own homes, therefore, homes have appreciated less than individual worker wages have increased (both adjusted for inflation) is flawed logic. we need more to reach a reasonable, rational conclusion.