One of the silver linings to the sharp decline in home prices in the past five years is that first-time homebuyers who had been shut out of the market were able to afford homes again. Unless they lived in expensive areas such as New York, Boston, Hawaii, San Francisco and other places where median home prices still are far above the ability of working couples to afford.
Unless you are a lawyer, owning a home is out of the question. A couple would have to save a full year's salary to come up with a 20% down payment.
Citing statistics from Fiserv Case-Shiller, The Times notes that prices nationwide have fallen 32% from their peak. The national median home price is $166,000, a level not seen since the mid-1990s and down substantially since the peak, when the median price was $226,000.
But if you look at a number of larger cities, the median home price far exceeds the ability of a couple with the median household income to buy. The Times writes: In fact, prices in several metropolitan areas — including New York, Los Angeles and Boston — will end up being higher than their pre-bubble levels, at least relative to local income. There are a few reasons, but one of the main drivers is the work force: these areas develop pools of specialized, highly compensated employees.
In Washington, D.C., homes are relatively affordable in the outer suburbs in Maryland, but would-be homebuyers are having a hard time finding homes they can afford closer to central D.C.
It’s very difficult to get a house in a desirable neighborhood for less than $400,000. If they’re out there, they probably haven’t been cared for and need several thousand to bring them up to conditions.