Real Estate Market

Housing affordability allows some "green" workers to buy, not most community workers

(04/09/2010) Some Americans who find employment refuge in certain areas of the nation's emerging "green" economy can often afford to buy a home, but most rank and file community workers still can't benefit from lower home prices and cheaper financing.

The Center for Housing Policy's "Paycheck to Paycheck: Wages and the Cost of Housing in America"found the income needed to purchase a median-priced home dropped in 93 percent in 208 markets studied, but among 65 types of workers, many still do not earn enough to own a home.

Mortgage rates remain relatively low and home prices in some markets have plummeted from 30 to 50 percent from the peak, but consumers simply aren't buying homes largely because they just can't afford to.

For some who can afford homes, tight credit and stiff underwriting rules close the door on their efforts.

Determining affordability

To determine home buying affordability, the center considered the income required to qualify for a mortgage for a given area's median priced home.

Assuming a 90 percent loan-to-value (10 percent down), monthly payments, at no more than 28 percent of household income, were calculated to include loan principal and interest as well as private mortgage insurance, estimated taxes and homeowners insurance.

The salaries for each of the 65 occupations are then compared with this qualifying income for each metro area.

Among "green" workers, electrical engineering technicians were able to purchase a median-priced home in 122 markets; environmental engineering technicians and HVAC mechanics in 118 markets. Apparently, however, a greener economy alone won't fully solve housing affordability problems.

Maintenance and repair workers could not afford to purchase a median-priced home in 159 markets, and insulation workers in 163 markets. Electrical engineering technicians could not afford the purchase a median-priced home in 86 markets, and environmental engineering technicians and HVAC mechanics in 90 markets, the study found.

Traditional community workers Workers in the traditional economy fared worse than green economy workers.

Police officers cannot afford to purchase the median-priced home in 86 markets; elementary school teachers in 83 markets; licensed practical nurses in 146 markets; janitors in 202 markets, and retail salespeople in 207 markets.

The center said in addition to the problem with low salaries for many occupations, tighter credit markets and stricter lending practices make it more difficult for those who can now afford a home to actually qualify for one. Low interest rates and falling home prices have made homeownership newly affordable in previously unaffordable markets for police officers in 37 markets, elementary school teachers in 33 markets, and licensed practical nurses in 26 markets. The most expensive housing markets were San Francisco and San Jose, CA; Honolulu, HI; Santa Ana and Santa Cruz, CA; New York and Suffolk-Nassau, NY; and San Luis Obispo, Napa and Oxnard, CA.

The least expensive markets were Wheeling WV; Battle Creek, MI; Youngstown and Springfield, OH; Bay City MI; Lima and Canton, OH; Flint and Detroit, MI and Mansfield. OH.

Too look at affordability issues in or near your home visit the center's study on line. For more information check the center's fact sheets.

 

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