BCT Editorial – 5/5/05

This page was last updated on May 9, 2005.

Housing bust; Editorial; Beaver County Times; May 5, 2005.

Below is a detailed critique of the subject editorial.

“Certain parts of the United States are fast approaching a housing crisis.

“The Associated Press reports the Center for Housing Policy, a coalition pushing for more affordable housing, has released two studies that show housing prices are outstripping wage increases in many areas, meaning more people are either spending above their means or living in dilapidated conditions.”

[RWC] The CHP is the research arm of the National Housing Conference. According to its website, the “NHC believes that every American, regardless of income, should have the opportunity to live in decent housing in a suitable neighborhood.”

You will also find that most of the contributors to the NHC “coalition” are businesses that benefit from policies that encourage the building, buying, and selling of housing. Gee, I wonder why the author failed to note this important link.

“One of every eight families in the United States - or 14 million - had critical housing needs in 2003, defined as either paying more than half of income for housing or living in run-down quarters, the AP reported.

“The median-priced home in 2003 was $176,000, up more than 11 percent from 2001. During this time, the AP reports national median salaries went up only 4 percent for licensed practical nurses (to $33,000), 3 percent for elementary teachers ($43,000) and 7 percent for police officers ($45,000).

“For many low- and middle-income Americans, renting isn’t a more affordable option. For renters, the center found a worker needed to earn $15.21 an hour in 2003 - or $31,637 for a 40-hour, 52-week job - to have a two-bedroom apartment that did not consume more than 30 percent of income.

“What this means is that many Americans are going to be priced out of housing markets in places such as Los Angeles, San Francisco, Boston and Washington, D.C., if this trend is not reversed, which appears to be unlikely.

“It’s another example of the United States fast becoming two nations, one rich and one poor, with a shrinking middle class trying desperately to hold on to what little it has left.”

[RWC] Wow, this looks pretty gloomy, until you realize the editorial failed to note perhaps the most important statistic. The editorial failed to note U.S. Census Bureau data shows home ownership is at an all time high 69% and has been growing since at least 1980.¹ Since I suspect the “rich” already owned their homes in 1980, this means the vast majority of ownership growth is by the so-called middle- and low-income classes.

1. Census Bureau Reports on Residential Vacancies and Homeownership; Bureau of the Census; April 25, 2005.