Do you see the problem with this story?<\/p>\n\n\n\n
\nResearchers examined the median home prices<\/strong> last year for roughly 575 U.S. counties and found that home prices in 99% of those areas are beyond the reach of the average income earner<\/strong>, who makes $71,214 a year, according to ATTOM.<\/p>\n\n\n\n
Homes “unaffordable” in 99% of nation for average American – CBS News<\/a><\/p>\n<\/blockquote>\n\n\n\n
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- First, numerous homes are not purchased by a single wage earner, but by two wage earners. 71% of buyers, per NAR, are couples, and 53% of all households have 2 incomes.<\/strong><\/li>\n\n\n\n
- Second, they’ve compared the average<\/em> <\/strong>income of a single wage earner to the median<\/em> <\/strong>price of homes – a majority of which are owned by dual income households.<\/li>\n\n\n\n
- Third, average and median do not measure the same thing.<\/li>\n\n\n\n
- Fourth, the largest cohorts of home buyers, based on median incomes, earn between 85,000 and 125,000 per year (see this<\/a>).<\/li>\n<\/ol>\n\n\n\n
By definition, half of the homes are priced less than the median. Consequently, the headline is misleading – implying the average American cannot buy a home in 99% of communities, which is not true. The average single wage earner cannot buy the median priced home – but there are cheaper homes in every market, and half the home buyers have 2 incomes, not one income.<\/p>\n\n\n\n
Home prices have risen (although over long periods of time, homes are mostly a hedge against inflation), and mortgage rates are now higher than recent years. In the early 1980s, mortgage rates exceeded 16% – we’ve been in worse situations in the past, but this context is omitted.<\/p>\n\n\n\n
This error in story telling is a common one – see past posts on this and related subjects<\/a>.<\/p>\n\n\n\n