CNN Money: Fewer new buyers can afford a home as rates rise

[Bush_Eats_Beef]

"The U.S. economy is strong and it's getting stronger. People are going back to work. There's a sense of optimism around this table, because these people have been out in the field and talking to people, talking to small-business owners and entrepreneurs. And I'm pleased with the progress we're making." - George W. Bush, June 17, 2004 (President Bush Speaks About 9/11 Commission, http://www.washingtonpost.com/wp-dyn/articles/A49013-2004Jun17.html)

Fewer new buyers can afford a home
Housing affordability for first -time buyers dives as rates rise.
November 7, 2005: 4:56 PM EST
By Les Christie, CNN/Money staff writer

http://money.cnn.com/2005/11/07/real_estate/buying_selling/housing_affordability/index.htm?cnn=yes

NEW YORK (CNN/Money) - Although earnings have risen about 2.6 percent, housing is even less affordable for first-time buyers than it was a year ago, according to the latest findings from the National Association of Realtors.

The NAR found that the average price nationally for a starter home rose to $183,500 in the third quarter, up $23,500 in the past year.

With a 10 percent down payment and a mortgage rate of 5.83 percent (the average in the quarter), the monthly cost of owning the average starter home would be $999 a month.

A new homebuyer would need income of $47,952 to qualify for such a mortgage, but the median income of first-time buyers was just $32,781 nationwide last quarter, yielding an affordability index value of 68.4 -- down from 74.8 a year ago and 80.9 for all of 2003.



"Bye bye, American Dream!"

[brmdp3123]

1. Interest rates are still very, very low.

I was damn glad to get a 10% loan on my first home. 5.83 is still a bargain.