Wages versus median home cost

Obviously the real estate industry is in some distress, and the median resale prices of homes have been steadily dropping since the so called sub-prime crisis. Recent figures put the median resale price of a house at $175,000. If you were to be able to obtain a mortgage on a home that cost $175,000 at 6.5% interest, with 1.75 percent taxes and insurance your payments would be about $1360 a month. If you have no other debt at all besides the mortgage, and few of us are in that situation, you would need to earn about $4500 per month to be able to buy that median-priced home. To make that much at a forty hour a week job you would have to make over $28 per hour–it would take an annual salary of $54,000 to qualify for the mortgage.

Employers don’t look at these numbers. Their goal is to pay workers as little as they can, and due to the ubiquity of corporate outsourcing, the competition includes non-American workers who can get by on a small fraction of what it costs to live here in the United States. So if the “American Dream” is founded on home ownership, a very small percentage of people these days are in a financial position to live that dream. Not many available jobs are paying $54,000, and while it is true that a couple may be able to pool their resources to qualify, this still stretches them very thin, and should one of them lose their job, they will find themselves being foreclosed upon in a matter of a few months.

You won’t read it in the mainstream media, but the strangulation of what used to be the middle class by the globally owned corporations is what has evaporated the American Dream and rendered the real estate market the domain of the wealthy.