Despite falling home prices and interest rates, the Washington area still is priced far above the earning power of most home buyers, according to a study released this week by a nonprofit group.
Purchasing a home in the Washington area requires a steady income of at least $121,197 a year, according to the Center for Housing Policy, a Washington-based housing research organization.
The median personal income in the region is $46,782 a year, according to the U.S. Census Bureau.
The median cost of a new home in Washington was $371,000 in 2007, the Center for Housing Policy reported.
“We hear a lot about the information economy, but the fact is most working families are still employed in traditional service occupations,” said Jeffrey Lubell, executive director of the Center for Housing Policy.
A breakout of five occupations demonstrating the fastest growth in the region offers little additional hope for purchasing the American dream home in the nation’s capital.
Registered nurses, who earned the highest median annual income among high-growth occupations at $63,291 a year, are making only slightly more than half the money needed to buy a home, the nonprofit group reported.
The other occupations — retail salesman, customer service representative, food preparation worker and office clerk — earned median annual incomes ranging from $21,566 to $39,473.
Economic trends of the past few months suggest affordability problems might be lessening.
U.S. home prices dropped by a record 8.4 percent in November, credit rating service Standard & Poor’s reported this week. The November figures showed the 11th straight month of falling home prices.
In addition, the Federal Reserve Board has been lowering interest rates, making loans more affordable. Yesterday, the Federal Reserve cut the interest rate banks charge each other by a half point to 3 percent, marking the fifth time rates were cut since September.
However, real estate executives say the home buying market still is in turmoil.
“The lower pricing would normally make housing more affordable but the lending requirements have tightened, so buyers need more money for down payments than they did two years ago,” said Aaron Liebert, real estate developer JPI’s managing partner for the Washington area. “This has helped the rental housing market, except that there is now a large number of for-sale units — houses and condos — that are being rented individually at deep discounts.”
Average rent for a two-bedroom apartment in Washington was $1,286 a month in the third quarter of 2007, the Center for Housing Policy reported.
Unless home prices can be made more affordable, employers would “have a difficult time attracting a quality work force,” Mr. Lubell said.
In other news …
• The Montgomery County Planning Board is scheduled to get a glimpse today of a 15-year development plan for the White Flint area. County planners are putting together recommendations for stimulating redevelopment near Metro Red Line stations, creating more parks and making Rockville Pike pedestrian-friendly. The board plans to make a final decision on whether to adopt the recommendations in the spring.
• Property Lines runs on Thursdays. Call Tom Ramstack at 202/636-3180 or e-mail tramstack@washingtontimes.com.
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