You have discovered the one thing that the majority of real estate experts are afraid to say out loud, housing prices are increasing at a much faster rate than salaries. It is a fact that just as the housing industry was seeing the average price of a home skyrocket in the seller’s market of 2005, the average salary remained stagnant or even dropped in many locations. Even in our current buyer’s market, home prices are still out of reach for a large portion of the population and mortgage interest rates are only going higher.
It is not just the result of the extreme greed evidenced during the prior seller’s market that the employment market has been unable to keep up with the cost of living for years without notice or repair from our government officials. Businesses are encouraged with tax breaks to outsource everything from a computer’s help desk to routine legal work. Not only is there no requirement to pay employees a wage that will be in line with the cost of living, but no one in our government will even acknowledge that there is a problem.
This issue is being addressed by some. Homes for Working Families (www.homesforworkingfamilies.org) is a national, nonprofit organization that is working with other housing organizations and cities to reduce the affordability gap. According to this organization, “One in every seven American families, a record 15.8 million families, now spends more than half its income on housing.” Another group working on this problem is the Department of Housing and Urban Development (HUD) at www.hud.gov. HUD approaches the problem by directly assisting the potential homeowners with programs that provide education and financial assistance. More cities are now coming to the realization that their own city employees, teachers, police, fire fighters and first responders may not be able to afford to live in the city they serve.
For those wanting to buy now, the best advice is to do your homework about what assistance is available for you. Look to programs in your city and state. You may find some assistance through your union or professional organization. Also review the programs posted at www.hud.gov. There is more information on this in the section on “Obtaining Financing.”