Wednesday, March 12, 2014

MORE ON HOME AFFORDABILITY AND FORECLOSURE

So why do people default on their mortgage - whether due to divorce, illness, unexpected expenses, loss of employment, etc. - the answer is the same: the house is unaffordable.

Yesterday, MSN had the following post:

"What you must earn to buy a home in 25 cities in 2014
By Tim Manni of HSH.com

How much salary do you need to earn to afford the principal and interest
payments on a median-price home in your metro area?

To find out, HSH.com took the National Association of Realtors'
fourth-quarter data for median home prices and HSH.com's fourth-quarter
average interest rate for 30-year, fixed-rate mortgages to determine how
much of your salary it would take to afford the base cost of owning a
home -- the principal and interest -- in 25 metro areas.

We used standard 28 percent "front-end" debt ratios and a 20 percent down
payment subtracted from the NAR's median-home-price data to arrive at our
figures. There is no doubt that your income will need to be much higher to
cover taxes, insurances and other expenses to live in the home, plus any
other debts you might have.

While the NAR continues to report strong year-over-year price growth, home
prices and mortgage rates retreated from the third to fourth quarter in
2013. While homeowners continue to praise home-price growth as it adds to
their equity positions, some homebuyers have actually been stymied by the
rapid growth as home prices have been rising faster than incomes."

And this was the result for New York - these figures do not cover taxes and other expenses to live in the home which are quite high in Nassau and can add that monthly figure to almost another $1000 a month and the required income figure to almost $90,000 a year.:

"What you must earn to buy a home in 25 cities in 2014
New York: $66,167.27
Mortgage rate: 4.38 percent

Quarterly change: -0.22 percent
Home price: $386,300

Quarterly change: -4.71 percent
YOY change: +2.8 percent
Monthly payment: $1,543.90

Salary: $66,167.27

Quarterly change: -$5,088
If you're on the cusp of affordability in the Big Apple, you must "buy on
the dips." The fourth quarter of 2013 would have been your time to pounce.
Lower mortgage rates and a $19,000 drop in home prices improved salary
conditions by $5,000."


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