Preface: If you're in the market for a home now - wait one year. According to all economic analysts, the home market is the next over-inflated bubble about to burst. And, as we all know, when Greenspan and the analysts mention a bubble-bursting, they in effect create one whether or not it exists alreadly

From NYTIimes:

Earning More, but Struggling to Own a Home
By DAVID LEONHARDT

BEDFORD, Mass. — Blake A. Newman is trying to avoid falling back two generations on the housing ladder.

His grandparents, immigrants from eastern Europe, lived in a rented apartment in the Bronx. His parents owned their own home in Queens, thanks partly to his father's second job as a concessions salesman at the old Madison Square Garden.

But still stuck on the first rung, Mr. Newman, a 37-year-old renter, spends part of every day reading up-to-the-minute real estate listings delivered by e-mail in hopes that he, his wife and their two children can find a decent house they can afford on his salary as a musician and teacher and hers as a nurse.

Around Boston, and in many other big metropolitan areas, rapidly rising home prices have overwhelmed the recent decline in interest rates and made the purchase of a first home more difficult than it has been in years for large numbers of younger adults. Like Mr. Newman, some find themselves living an odd inversion of the American dream, earning considerably more money than their parents did, but still struggling to own a home.

In many places, people who did not join the ranks of homeowners in the last decade face greatly diminished financial prospects, having missed out on a home-price boom that added tens, if not hundreds, of thousands of dollars to other families' wealth, economists say. Making matters worse, many renters invested in the stock market in recent years, to build up savings for a down payment or children's future college expenses, only to lose money or earn a meager return on their investment, while the homes they want to buy were soaring in value.

"It just feels like people like us, who've been renting for a long time and want to get started in their own house, can't," Mr. Newman said. "Prices have just gone crazy."

The house-price boom — concentrated in the Northeast and California — is also creating significant new social divisions in the metropolitan areas affected, separating younger families from older ones and making some towns less diverse. In Milton, Mass., for example, a grade-school teacher recently wrote to the town planning board asking it to create affordable housing, so she could move from her home 40 minutes away and more often attend Little League games and concerts where she teaches.

"People who haven't been in on the game find that the opportunity to own is a moving target that's moving further away from them," said Karl E. Case, an economist at Wellesley College and a co-founder of a real-estate research company that is now called Fiserv CSW. "It's creating inequality. It's creating more stratified communities."

Around Boston, where house prices have doubled in the last five years, a family making the local median income of $61,000 can afford the monthly payments on a house worth only half the median price of $395,000. This is true even though the annual interest rate on a typical mortgage fell to a four-decade low last month, before inching back above 6 percent. In the mid-1990's, a median income allowed the purchase of nearly a median-priced house, according to Economy.com, a consulting firm in West Chester, Pa.

For families who own homes, of course, the surge in house prices and fall in mortgage rates have often brought a windfall, in the form of refinanced loans and lower monthly payments. Many consumers have spent the extra money on new cars and other products, preventing last year's recession from being worse than it was, economists say.

But homeowners will ultimately be affected as well by the growing number of people priced out of hot housing areas. With fewer potential buyers entering the market at the bottom, the sharp run-up in home values may be nearing an end, not only here in Boston but also in New York, Denver, Minneapolis, nearly every large city in California, and other places where prices have greatly outstripped incomes.

Already, the national home ownership rate, after rising steadily since 1994, has leveled off and fallen slightly over the last year when it reached a record high 68.1 percent. Here in the Boston region, only about 59 percent of families own their homes, and the proportion has dropped a little during the last five years of rapid price gains.

<font color="#00ccff">I had figured roughly 18 months [img]smile.gif[/img] But a year may do it too. Especially here, you would not believe the prices houses are getting right now. You know you are in trouble when the ad's read: Affordably Priced, from $540,000

I nearly choked.
</font>

I am totally amazed on a recurring basis the diversity of prices. In West Virginia you can still get a new home, 2 or 3 bedroom, for about $40,000. In Dallas, the prices are around $250,000 up north Dallas and $150,000 in the South sections of town...

I can wait. Right now it is all I can do to afford where I live now! This is the oddest market for a lot of realtors as well... the sellers can ask just about whatever they want and get it. And yet, the buyers get great rates on mortgages.

There should be a correction in the market, and I can wait for that. [img]tongue.gif[/img]

<font color="#00ccff">That correction that is gonna benefit you and I Charean, is going to completely hose a great many people who bought high and will be forced to sell low. It will be ugly. :( That won't keep me from buying my home though (unless interestet rates go bonkers too)</font>

[ 11-04-2002, 07:04 PM: Message edited by: MagiK ]

Where I was brought up in London a 3 bedroom house is available from about £530,000.

Where I was brought up in London a 3 bedroom house is available from about £530,000.</font>[/QUOTE][img]graemlins/jawdrop.gif[/img] Thats $1 200 000 Canadian! I guess people in London buy small...

<font color = lightgreen><font color = red>Belle</font> and I would really like to buy a house, too. The average house price in our current zip code is, according to the Sunday newspaper, about $150,000. The typical house payment, adding in interest, taxes, and insurance (the escrow), is about 1% of the purchase price of the house--we would need to make $1,500 per month just to afford the house, not counting any other bills.
The median income in our little town is--hang on to your hats--about $80,000. We have seen houses listed up to $2,000,000 around town, too. [img]graemlins/wow.gif[/img]
Lenders normally want your debt ratio for buying a house to be around 30% of your income. This makes it easy to figure out what kind of house you might be able to afford, according to this simplified formula: purchase price/current income = 2.5 (so if your income is $50,000 you could afford a $125,000 house).

Enough numbers. To make a long story short, I wish we had our own house, too. *sigh*</font>

Lord, Lordy, Lordy, you City folks are getting skinned for houses ;) Try 4 bedroom 3 bath, 2,500 sf, including finished basement, 2 car gar. 1/3-1/2 acre lot $110,000-$135,000 range. :D :D :D

<font color="#00ccff">If Kaiser ever relents on telecommuting, Im moving north to PA where the housing prices are more real too....although PA just turned democrat on me :( </font>

I feel like I must have been real lucky in finding my house this spring! Only $52,000 for a 2 bedroom with no major work needed done and monthly payments are only about $400. It's in a good neighborhood and close to my son's school, my uncle's house, my grandma's house, and the value is estimated to go up in the next couple of years because the town is getting a lot of new businesses. Only problem I've had with this house so far is getting the water heater adjusted and not having a phone jack in the room I have my computer in (50 foot cord going into other room; lol).