Housing heading for Disaster
"I barely have money to survive," he said.
Ray is one of more than 7.5 million people -- almost 15 percent of American homeowners with a mortgage -- who are spending half of their income or more on housing costs, according to 2007 data released Tuesday by the U.S. Census Bureau. That is up from nearly 7.1 million the year before.
Traditionally, the government and most lenders consider a homeowner spending 30 percent or more of their income on housing costs to be financially burdened. But that definition now covers almost 38 percent of American homeowners with a mortgage -- 19 million of them.
Though home prices have fallen this year, in the most expensive markets where home prices tripled during the boom, many working families still cannot afford to buy a home.
"We had a bubble," said Dean Baker, co-director of the Center for Economic and Policy Research in Washington, D.C. "This is a case where we absolutely want the market to adjust."
50% on home expenses...the other 70% on basic necessities....the numbers just don't add up. Factor in rising food and fuel prices and the numbers are even worse. Add in rising unemployment and we are right in the cross hairs of nothing America has ever seen before.
Just with what we can identify...we are looking at millions of additional foreclosures hitting the market. A much higher number than we have already seen.
Most Americans now are having trouble paying for food fuel and shelter. The cost of living has simply out paced the fall in incomes over the past eight years. Home prices need to fall BELOW pre bubble pricing before we will see any stabilization...right now my estimates are to 1990 prices.
With rising costs...it will be very difficult for any homebuilder to make a profit for the foreseeable future. Expect foreclosures to skyrocket without massive government intervention and a dramatic fall in home prices....from here.
The problem is a mess and getting messier. Until the average American Family can afford food fuel and shelther on an average income....expect dramatic slowing ahead as many families are leveraged.