Even After A Record Drop In Sales Prices In November And An Approved Federal Stimulus Package, Housing Still Found To Be Widely Unaffordable
January 29th, 2023 by MG
With all the talk about the housing bubble and ways to help fix the situation, it seems that for every solution, two more problems pop up. We saw housing prices fall in the last couple months, but then we hear that the inflation rate in 2007 went up 6.3%, the largest increase in 17 years.
Now an approved stimulus package has been aimed at the struggling lower and middle classes by giving them checks ranging from $600 to $1,200. However, many homeowners know that the sad truth is that the money that the government hopes will fuel retail purchases and the economy, will likely just be used to help folks stay in their homes one more month while they try to avoid foreclosure.
The House, seizing a rare moment of bipartisanship to respond to the economy’s slump, overwhelmingly passed a $146 billion aid package Tuesday that would speed rebates of $600-$1,200 to most taxpayers.
The measure would send rebates to some 111 million people, including roughly 35 million families who don’t make enough to pay income taxes. Individuals with adjusted gross income of $75,000 and couples making $150,000 would get rebates equal to the taxes they paid, up to $600 for individuals and $1,200 for couples. Those making more than that would see their rebate go down by 5 percent of every dollar of income over the limits.
Taxpayers would get at least $300, even if they paid less than that in taxes — or $600 for couples. That’s also the case for those who don’t pay income taxes but earn at least $3,000.
All eligible people would get an additional $300 per child.
Despite these glimmers of hope though, it seems that affordable real estate still eludes the grasp of many buyers.
U.S. home prices plunged by a record 8.4 percent in November, marking two years of slowing returns, according to a key index released Tuesday.
However, housing is only slightly more affordable for many American workers, a separate study found.
The decline in the Standard & Poor’s/Case-Shiller 10-city composite home price index was the biggest year-to-year drop since a 6.7 percent decrease in October. The November performance was the 11th straight monthly decline. The index tracks prices of existing single-family homes in 10 metropolitan areas.
“Nothing in these numbers suggest a bottoming out. The numbers universally are disappointing,” said David Blitzer, S&P’s managing director and chairman of the index committee.
The index is considered a strong measure of home prices because it examines price changes of the same property over time, instead of calculating a median price of homes sold during the month.
Despite falling home values, many workers nationwide are still priced out of the market, the Center for Housing Policy reported Tuesday.
The research affiliate of the National Housing Conference in Washington, D.C., found that a working family needed an annual income of $78,075 to qualify to buy a home priced at $239,000, the median price nationally in the third quarter of last year.
However, the median salaries of many occupations fell below that amount. Registered nurses earned an average of $58,766 last year; elementary school teachers, $48,293; police officers, $47,730; retail sales people, $21,191; and janitors, $24,165.
The study looked at workers in 60 different occupations in some 201 metro areas.
Housing fell into a deep slump last year as delinquencies and foreclosures surged on mortgages made to risky borrowers. Foreclosure filing tracker RealtyTrac Inc. said Tuesday the number of U.S. homes that slipped into some stage of foreclosure climbed 79 percent in 2007 from the previous year.
So far, the downturn has left homebuilders and lenders with massive quarterly losses, while Wall Street investors have taken billion-dollar write-downs on securities backed by mortgages.
On Tuesday, the nation’s largest mortgage lender Countrywide Financial Corp. said it swung to a loss in the fourth quarter due to rising loss provisions and impairment charges. Earlier this month, Countrywide said it will sell itself to Bank of America Corp. for about $4 billion in stock.
Also last week, President Bush and House leaders agreed on a $150 billion economic stimulus package which included a plan to increase the size of mortgages Fannie Mae and Freddie Mac and the Federal Housing Administration can handle. But critics believe more dramatic action is needed.
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