By Robert S Weinroth
One of the few things I remember from my college economics classes, over 40 years ago, is the law of supply and demand, considered one of the fundamental principles governing an economy. It is described as the state where as supply increases the price will tend to drop or vice versa, and as demand increases the price will tend to increase or vice versa.
During the real estate “meltdown,” less than a decade in our past, we experienced the result of a precipitous drop in demand. As homeowners found themselves “underwater,” seeking a willing buyer to purchase their residences became a near impossibility. Prices fell as there were no buyers, no ability to finance and where there were buyers, they were looking to grab assets at bargain basement prices.
Today, with the opposite dynamic in play, there is a dearth of affordable (workforce) housing. The Urban Land Institute defines workforce housing as being priced to serve households making between 60 and 120 percent of area median income.
Jon Banister and Miriam Hall
Yet, despite the influx of jobs, wage growth has remained stagnant, leaving millions of middle-class Americans without savings, living paycheck to paycheck as they continue to fight for what generations before have taken for granted: decent, affordable housing.
By Jeff Ostrowski – Palm Beach Post Staff Writer
Mirroring a national trend of rebounding home prices and rising mortgage rates, Palm Beach County saw housing affordability fall to a 10-year low in the second quarter of 2018, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index.
Just 54.9 percent of homes sold in Palm Beach County in the second quarter were affordable to a median-income family, according to the index. That’s the lowest affordability reading since 2008.
That’s based on a median home price of $260,000 (the measure combines new and existing houses, condos and townhouses) and a median income of $71,800.
Renters always get the same advice: Don’t spend more than 30% of your income on housing. That’s not just an anecdotal recommendation. According to the Department of Housing and Urban Development, households that spend more than 30% of their income on rent are “housing-cost burdened.” And the heavier that burden gets, the more difficult it is to afford food, utilities, and other necessary living expenses. But how feasible is the 30% rule?