Homes still out of reach

July 12, 2012 | South Florida Sun-Sentinel

The American Dream is elusive for some, despite lower home prices in many markets.

Though median home prices fell since 2011 in the majority of markets, home ownership still was not within reach for one-third of the 74 occupations studied, according to a report to be released today by the Center for Housing Policy.

In South Florida, lower home prices and record-low interest rates in recent months have made homes more affordable than they have been in more than a decade. Yet credit and down payment issues still are keeping some from home ownership, experts say.

“Fort Lauderdale and West Palm Beach are doing better than a lot of other places,” said Laura Williams, author of the report for the Center for Housing Policy, the research arm of the nonprofit National Housing Conference.

Income needed to qualify to buy a median-priced home of $105,000 in Fort Lauderdale in the first quarter rose to $29,653 from $29,611 on a the median-priced home of $100,000 home a year ago, according to the report.

Seventy percent of workers in the occupations studied could afford the median-priced home, according to the report. Occupations included teachers, police officers, truck drivers, electricians and other commonly held jobs.

In West Palm Beach, income needed to afford the median-priced home of $120,000 fell to $33,800 compared to $35,500 a year ago, she said. That allowed 61 percent of workers in occupations studied to afford a median-priced home, according to the report.

But home affordability has to do with more than home prices and qualifying income, said Guy Cecala, publisher of the newsletter “Inside Mortgage Finance.”

“In South Florida, you’re seeing literally the best prices you’ve seen in more than a decade. The fact that [some] teachers and firefighters can’t afford homes suggests the problem runs a lot deeper than that. They’re saddled with other debt, perhaps another house under water,” he said.

He said credit is an issue for many people because banks and mortgage companies are requiring a credit score of 700 or above.

But BankRate analyst Greg McBride said some consumers have difficulty saving for or securing the down payment. “The bigger sticking point isn’t the monthly mortgage payment, but do you have the money for the down payment?” he said.

On a $150,000 house, a 3.5 percent down payment is $5,250, he said, for example. New homeowners also have to pay closing costs on the loan and keep enough emergency savings to afford the home’s upkeep, McBride said.