Many Priced Out of Housing Market

January 30, 2008 - 5:38am

WASHINGTON - Home prices are falling in metropolitan areas across the country, including the Washington, D.C, market. But a new study finds that many workers are still priced out of the market.

In Washington, the median price of a home in 2007 was $371,000, according to figures from The Center for Housing Policy, which is a research affiliate of the National Housing Conference in Washington. A working family would need an annual income of $121,197, to qualify for that home.

The median price of a home in Bethesda, Md., ranked 17th in the country, at $436,000. D.C. ranked 25th at $371,000 and Baltimore 46th at $269,000.

San Francisco had the highest median price, at $770,000. Lima, Ohio was the lowest, at $87,000.

But the median salaries of the fastest-growing occupations fall well below that amount. For example, registered nurses in Washington earned an average of $63,291 last year; retail sales people, $22,823; and office clerks, $32,113.

The study looked at workers in 60 different occupations in some 201 metro areas.

The reports come a day after the government said new home sales plummeted last year by the biggest amount on record, while home prices edged up only 0.2 percent to $246,900, the worst performance since the 1991 housing downturn.

Housing fell into a deep slump last year as delinquencies and foreclosures surged on mortgages made to risky borrowers. Foreclosure filing tracker RealtyTrac Inc. said Tuesday the number of U.S. homes that slipped into some stage of foreclosure in 2007 climbed 79 percent from the previous year.

So far, the downturn has left homebuilders and lenders with massive quarterly losses, while Wall Street investors have taken billion-dollar write-downs on securities backed by mortgages.

On Tuesday, the nation's largest mortgage lender Countrywide Financial Corp. said it swung to a loss in the fourth quarter due to rising loss provisions and impairment charges. Earlier this month, Countrywide said it will sell itself to Bank of America Corp. for about $4 billion in stock.

The fear has seeped into the broader market, creating a squeeze on all types of credit and curbing consumers' willingness to spend. Economists worry the prolonged housing downturn could plunge the economy into a full-blown recession.

The Federal Reserve has stepped in to stem the fallout by slashing a key interest rate by 1.75 percent since September, including an unexpected emergency three-quarter-point cut to 3.5 percent last week. The central bank begins its two-day meeting Tuesday.

Also last week, President Bush and House leaders agreed on a $150 billion economic stimulus package which included a plan to increase the size of mortgages Fannie Mae and Freddie Mac and the Federal Housing Administration can handle. But critics believe more dramatic action is needed.