Dennis Ferguson wrote:

Dave Heil wrote:

Dennis Ferguson wrote:

If you look at this one

http://www.census.gov/hhes/www/housi.../q303tab5.html

you'll see that the rate of home ownership in the US, which varied
between 63% and 66% for the 30 years prior to 1995, took a jump starting
in about 1997 and was at 68.4% in the quarter just ended. It seems
hard to argue that houses have gotten less affordable over the long
term when the fraction of people who demonstrate they can afford
to own a house by doing so remained fairly constant for so long and
actually took a significant upturn in the last few years.

I don't think it hard to argue at all, Dennis. Years back, people were
advised not to spend more than 25% of their income on housing. Later
this was revised to 33%. Today it is not uncommon for folks with two
incomes paying *half* of their combined income for housing.


That's very true, but my strong bias towards arguments which can be
supported by existence proofs requires me to argue that the fraction of
one's income spent on housing which is "affordable" isn't necessarily
a fixed number, but instead depends on the fraction of one's income that
doesn't need to be spent on everything else one requires to live.The
fact that those people ended up in houses despite the chunk of income
this took says to me the chunk was still affordable, though at that
level of investment it would be sad if the value of the house dropped.

Right! What these people consider "affordable" does indeed vary. I had
some neighbors some years ago who were so hell bent on having a
desirable hous in a desirable neighborhood that they financially
destroyed themselves. They spent way more than they could afford for the
house in the first place, then borrowed money for the down payment, then
ended up paying well over 50 percent of their take home for their
mortgage payments. It wrecked them, lock stock and barrel. I rmember
them right before they moved, chuckling how they put one over on the
bank. They were *so* fixated on thier goal, that they sacrificed
everything else for that house.

There is much more to life than having a house, come hell or high water.
The owners must have enough capital left over that they can participate
in being a consumer. If a person is "house poor", they get to stay home
and enjoy their house, but lots of the extras, which help drive the
econnomy, go wanting.

On the other hand, despite the wailing and gnashing of teeth of the
real estate agents, I spent about 50K less than what I was approved for
for a house, choosing to enjoy my hobbies, provide extras for the wife
and kid, and put money into retirement accounts.

So they ended up selling the house (I think they went bankrupt, but am
not sure). I'm still here, living a tad more modestly, but putting money
in the bank. Different ideas on what is affordable? You bet!

- Mike KB3EIA -

- Mike KB3EIA -