Another Sign That The Economy Has Hurt The Middle Class

Study: Home Ownership Is a Shrinking American Dream for the Middle Class

Thursday, 15 May 2014 08:37 AM

By John Morgan

Share:

  Get Short Link |

  Email Article |

  Comment  |

   Contact Us  |

  Print  

|  A   A  

• inShare

The number of middle-class Americans who can afford home ownership is falling in more cities, according to a new industry study.

The report from real estate research firm Trulia concludes that in 20 of the top 100 largest metro area, the middle class are now frozen out of the home buying market.

Trulia considers a home affordable for a median income buyer in a given market if total monthly costs — including mortgage, insurance and property taxes — after a 20 percent down payment are less than 31 percent of a region's median household income.



Trulia Chief Economist Jed Kolko noted monthly payments for an average home now cost 20 percent more than a year ago, according to USA Today.

"Even having a college degree is no guarantee that homeownership is within reach in the priciest markets. There's no easy way to make housing more affordable, though new construction can help," Kolko said.

The trouble with that last point, though, is that new construction is more rare in the most expensive markets because fewer people can afford to buy there — a simple case of supply and demand, according to Kolko.

"For America's most expensive housing markets to become significantly more affordable, they would need either a spectacular drop in demand — a local economic collapse, for example — or a dramatic increase in housing supply."

The least affordable U.S. markets, and the percentage of homes for sale in each where median-income Americans can afford to buy, are:

1. San Francisco, 14 percent
2. Los Angeles, 23 percent
3. Orange County, Calif., 24 percent
4. New York/New Jersey Metro, 25 percent
5. San Diego, 28 percent
6. Ventura County, Calif., 29 percent
7. San Jose, Calif., 34 percent
8. Fairfield County, Conn., 37 percent
9. Honolulu, 39 percent
10. Oakland, Calif., 40 percent.

In addition, some popular metro areas had particularly steep drops in affordability in the past year. In Denver, the share of affordable homes slid to 50 percent from 67 percent. The figure fell to 29 percent from 43 percent in Ventura County, and to 48 percent from 62 percent in San Antonio.

The prospects for home ownership are even bleaker for Americans who are less educated, according to Trulia. The study found home ownership is out of reach for the less educated in most of the top 100 metro markets in the U.S.

"Even within a local market, affordability depends on where you land in the income distribution; and how much education you have often shapes your income today and in the future," Kolko said.

The more optimistic flip side of the Trulia study is that since the middle class has been priced out of home ownership in 20 of the 100 largest markets, they can still afford to buy a home in the other 80. "In most U.S. markets, the majority of homes for sale are within reach of the middle class, and buying is cheaper than renting in all of the 100 largest metros," Kolko said.

Home prices in most American cities continued to grow in the first quarter of 2014, according to National Association of Realtors (NAR) data cited by U.S. News & World Report. 

Lawrence Yun, chief economist at the NAR, said, "The price increases over the past two years have been a double-edged sword. It's been very good for the owners or recent buyers because they're immediately getting equity."

"But it has not been good news in terms of affordability because affordability is inversely related. That means that for potential buyers, it's more difficult because it's pricier," he told U.S. News.

 

Related Stories:

• Yale's Shiller: Rise in Home Prices Likely to Slow This Year
• Increased Supply of Homes Signals Stall in Home Prices

© 2014 Moneynews. All rights reserved.

The ObamaCrapCare Plan--Hide The Truth, Promote the Lies And Move Toward Medicare For Everyone

Expensive Obamacare Website Crashed Purposely, To Hide Expensive Obamacare Plans

October 22, 2013 by Sam Rolley 

PHOTOS.COM

Conservative estimates of the amount of taxpayer dollars spent on President Barack Obama’s glitch-ridden healthcare exchange website place its cost somewhere in the range of $500 million.

According to figures from the Government Accountability Office, nearly $394 million from fiscal year 2010 through March 2013 was spent on contracts to build the “federally facilitated exchanges.” An estimated additional $150 million has been spent on administrative costs associated with the implementation of the Affordable Care Act.

By comparison, here’s what similar investments have garnered in the private tech industry in the United States, according to an assessment by Digital Trends:

• After receiving an initial round of investment in June 2004, Facebook grew and improved until 2010 without spending $500 million.
• Twitter operated with $360.17 million in funding from 2006 until 2011, when it received an additional $400 million in funding.
• Before being bought by Facebook for $1 billion, the wildly popular photo sharing company Instagram operated with just $57.5 million in funding from 2010 to 2012.
• Linkedin, the preferred social network of business professionals, has raised only $200 million in funding.

Facebook has more than 1 billion active users. Twitter handles more than 340 million tweets each day. On any given day, more than 7.3 million people might be active on Instagram. And Linkedin is helping more than 225 million professionals throughout the world network at the moment.

Obama’s online health insurance exchange, after being online for just more than two weeks, is falling apart. And while it may seem natural for glitches to be part of the initial rollout process, reports indicate that the Obamacare website is rife with problems that are much more serious than a few lines of errant computer code.

On Monday, The New York Times reported that up to 5 million lines of coding could need to be rewritten in order to improve the Obamacare enrollment system to the point that users can actually make it through the enrollment process. The Department of Health and Human Services (HHS) said over the weekend it was bringing in “some of the best and brightest” to fix the website. But the job may not be finished in time for uninsured Americans to sign up for health insurance in time to comply with the Affordable Care Act’s individual mandate.

“Administration officials approached the contractors last week to see if they could perform the necessary repairs and reboot the system by Nov. 1,” the Times report said. “However, that goal struck many contractors as unrealistic, at least for major components of the system.

“Some specialists working on the project said the online system required such extensive repairs that it might not operate smoothly until after the Dec. 15 deadline for people to sign up for coverage starting in January, although that view is not universally shared.”

Even once the surface problems are repaired, one expert told the Times, other malfunctions are certain to become apparent.

The President assured Americans in a speech from the White House Rose Garden on Monday: “Nobody’s madder than me about the fact that the website isn’t working as well as it should, which means it’s going to get fixed.”

Flocked by what the White House described as a group of people who “have either benefited from the health care law already or are helping consumers learn about what the law means for them and how they can get covered,” Obama went on the say that the website failures are not representative of the Affordable Care Act’s overall effect.

“The essence of the law, the health insurance that’s available to people, is working just fine,” Obama said.

But, some observers believe that the President is lying.

Writing for Forbes, Senior Fellow at the Manhattan Institute for Policy Research Avik Roy, posited earlier in the month that part of the reason the healthcare exchange website is so dysfunctional is related to a lack of transparency over the massive healthcare cost increases that accompany Obamacare.

Roy wrote: “Healthcare.gov forces you to create an account and enter detailed personal information before you can start shopping. This, in turn, creates a massive traffic bottleneck, as the government verifies your information and decides whether or not you’re eligible for subsidies. HHS bureaucrats knew this would make the website run more slowly. But they were more afraid that letting people see the underlying cost of Obamacare’s insurance plans would scare people away.”

Later in the article he continued: “A Manhattan Institute analysis I helped conduct found that, on average, the cheapest plan offered in a given state, under Obamacare, will be 99 percent more expensive for men, and 62 percent more expensive for women, than the cheapest plan offered under the old system. And those disparities are even wider for healthy people.

“That raises an obvious question. If 50 million people are uninsured today, mainly because insurance is too expensive, why is it better to make coverage even costlier?”

In short, the White House likely knew that its health insurance exchange websites would crash once opened. It has even been suggested that Administration officials were repeatedly warned by IT experts that the bottleneck created by making Americans sign in and provide mountains of information before getting to see the actual cost of the Obamacare plans would crash the site. But, it seems, the President and his Administration officials made the determination that criticism over a broken website was better than the alternative of not hiding the prices, thereby revealing that, for the average American, the Affordable Care Act is anything but affordable.