This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Even Two-Income Families Find It Harder to Buy a Home

NEW YORK (TheStreet) -- Fannie Mae has an encouraging report on the housing market.

In it, Fannie Mae says 38% of American homeowners call this a "good time" to sell a home, compared with just 26% at the same time last year.

Buyers are more optimistic, too, with 52% saying it's "easier" to get a mortgage these days, compared with 47% last year.

That's good news for a real estate market that could use it, especially as the all-important spring selling season opens.

Must Read: 5 Steps to Backing Away From Bankruptcy

"The housing recovery continues to proceed in fits and starts," says Doug Duncan, chief economist at Fannie Mae. "Rising mortgage rates and a lack of supply have dampened housing market momentum."

"However, we see several positive signs going into this year's spring home buying season compared with last year," he says. Buyers are more confident about their personal finances and more bullish about qualifying for a mortgage.

"Still, those who are pessimistic about buying or selling a home today tend to point to economic conditions as the primary issue, and most consumers continue to say the economy is on the wrong track," Duncan says. "Looking forward, we expect to see a pickup in economic growth later in the year, and this may boost the confidence of prospective buyers and sellers."

Fannie Mae reports that only 12% of Americans say they expect their financial situation to worsen, down from 21% last year.

But separate data from Redfin, a real estate brokerage firm, shows that most families with two middle-class incomes still can't afford to buy a home (at median sales prices) in many U.S. metropolitan centers.

Officially, Redfin reports, 41% of middle-class families with those two incomes can afford to buy a home in 40 major U.S. cities.

It gets worse for one-income households. Redfin notes that just 10% of one-income households could afford a mortgage in those 40 cities.

Why the difficulty in home affordability, especially as more buyers seem to want to buy? The firm explains that housing prices have risen by 13% in each of the past two years, while median household income hasn't moved an inch (adjusted for inflation.)

Redfin says home affordability is most problematic in California, where homebuyers with two middle-class incomes (think police officer and hospital nurse) can't afford a home in the state's eight largest cities.

Richmond, Va.; Camden, N.J.; Philadelphia; and Atlanta offer the most affordable homes for two- and one-income households. If home prices rise further in 2014, that gap is only going to grow wider, and could send the nation's residential real estate backward as fewer buyers chase more abundant, but more expensive, homes.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.74 -1.15%
FB $117.58 0.73%
GOOG $693.01 0.29%
TSLA $240.76 -2.81%
YHOO $36.60 0.03%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs