Affordable Housing In Decline: Rising Prices, Higher Loan Coss, Strict Regulations and Low Wages Keep Buyers out of the Market.

Despite much chatter predicting a looming cooling period for Florida's real estate market, Alan J. Heavens of the Philadelphia Enquirer reports otherwise. Citing the National Association of Realtors' (NAR) most recent data, Heavens relays that fewer Americans could afford to buy a house in 2005 than in 2003, despite the fact that existing-home sales numbers have been even for the past three years. A town architect of Osceola County that Heavens references in his piece argues that despite an effort to construct smaller, less expensive houses, builders have seen "sale prices rise faster than [they] can build."

Aside from the markets inability to keep pace with builders, Heavens also references its inability to keep stride with annual income and rising mortgage rates. The concurrent challenge of the resale market is displayed in recent data cited by Heavens that quotes the median sale price of an existing home nationally has risen form $170,000 to $207,300.

Controversial opinions of builders place the blame for this in the lap of local government regulations, choosing to set such standards as an increased minimum lot size, impact fees, and regulatory costs (adding up to approximately $120,00 of the median total fee assumption).

Alongside the median sale price of existing homes rising by nearly 22% in the past few years, Heavens also points to the fact that the effective rate for 30-year fixed mortgages rose from 5.74% to 5.91% in 2003 to an average 6.3% today, which subsequently rose the average monthly principal and interest payment on a mediam priced home from $793 to $985.

After addressing all of these complicated and intricate factors, Heavens assesses that in line with his gathered NAR data, in order to purchase a $207,300 house, assuming a 20% down and 25% qualifying ratio for monthly housing expenses to gross income loan underwriting would require a buyer to have a median annual family income of $57,214.

Despite his claim that affordable housing may still be in decline, Heavens still proclaims it is all relative, especially in light of the fact that, as noted by NAR spokesman Walt Molony that this affordability index is both "relatively slow-changin" and subject to seasonal variations. However, due to situational elements surrounding the index tool's inception year (1981), Molony explains it is a "fairly conservative measure of affordability in today's lending environment, particularly for first-time buyers." Furthermore, following data that has been tracking affordability for first time buyers by the NAR since 1977, "it has always been a challenge to buy your first home."

Executive director of Harvard's Joint Center for Housing Studies espouses that "housing affordability is a chronic problem, and narrowing the gap between what decent housing costs and what low-wage workers and retirees can afford will remain a major national challenge.