NY Times Article: 2% of Long Island Homes are Affordable (New York: houses, purchase)

[alice_61]

http://www.nytimes.com/2007/01/26/ny...ref=realestate

[OvertaxedOnLI]

The relevant part of that article is the definition of "affordable". The writer begins by defining affordable as a figure no more than 2.5% of the homeowner's income. Then several paragraphs later the writer admits that

"The 2.5-times-income formula for home prices is often ignored across the New York metropolitan area, where many residents spend disproportionately for shelter and shortchange other parts of their budget compared with other parts of the country."

So what this article is doing is applying an affordability standard to Long Island that historically is not relevant to this particular area.

I'm not denying that homes have become less affordable on LI than they used to be (but I blame that more on school taxes than on home prices); I just get really irked when writers use an inappropriate statistic as the basis for a "Chicken Little"-style article.

[mead]

I alway thought the standard was 3 times your income, but I think you're missing the whole point of the article. Even by that 2.5 standard a lot of people were able to purchase a house a little bit under a decade ago. The same can not be said of the situation today.

Take a look at this graph: http://graphics8.nytimes.com/images/.../longlarge.jpg

I think the figure of 60% of houses in the year 2000 selling for $250,000 or less going down to 2% today is quite insane. It just shows how crazy the housing bubble has gotten. And it seems like it still has quite a long way to deflate: http://graphics10.nytimes.com/images...aph2.large.gif