Housing recovery?need purchasing power.

[Rich Weese]

I read an article today that makes me more nervous about a recovery.Associated Press--
Inflation adjusted wages rose till about May 2008. It hit $18.53 or $8.65 in 1982 adjusted rate. Since then, the rate according to Labor dept has dropped to $8.54, a drop of 1.3%.
Here is my question for the smart folks on here. What was the average priced home price in 1982? Another words, what would $8.65 qualify you for? Compared to todays price of average home? You have to have people qualify with the average wage for the average home, or I see no recovery.
"The resulting wage depression caused an economic scarrring of the labor force." For example, the inflation- adjusted wages stagnated for 4 years after the 1991 downturn. They also remained flat from 2002 to 2005 after the mild recession of 2001. What will be the result after we muddle through the mess we're in now?
The question seems to be, how can you have a housing recovery if wages stay flat or low, lenders won't loan and people have a hard time qualifying? Enen when the unemployed find jobs, they're being forced to take much lower pay, if they can even find a job. Somewhere around 6 applicants for each available job, and wages are averaging 25% less, if you're lucky enough to be offered a job. Rich

[Jeff Warner]

Originally posted by Rich Weese:

I read an article today that makes me more nervous about a recovery.Associated Press--
Inflation adjusted wages rose till about May 2008. It hit $18.53 or $8.65 in 1982 adjusted rate. Since then, the rate according to Labor dept has dropped to $8.54, a drop of 1.3%.
Here is my question for the smart folks on here. What was the average priced home price in 1982? Another words, what would $8.65 qualify you for? Compared to todays price of average home? You have to have people qualify with the average wage for the average home, or I see no recovery.
"The resulting wage depression caused an economic scarrring of the labor force." For example, the inflation- adjusted wages stagnated for 4 years after the 1991 downturn. They also remained flat from 2002 to 2005 after the mild recession of 2001. What will be the result after we muddle through the mess we're in now?
The question seems to be, how can you have a housing recovery if wages stay flat or low, lenders won't loan and people have a hard time qualifying? Enen when the unemployed find jobs, they're being forced to take much lower pay, if they can even find a job. Somewhere around 6 applicants for each available job, and wages are averaging 25% less, if you're lucky enough to be offered a job. Rich

Rich,

Great post. I think the only people that truly believe that we're well on our way to a recovery are the un-informed. I hadn't thought about the angle that you've brought up from this article but it is definitely more then just something to ponder, it is a serious problem.

I did a quick search on google and found this site:

[/url]http://www.realestateabc.com/graphs/natlmedian.htm[url]

According to that site, the median home price in 1982 was $67,800. Data for 2009 is all over the map, depending what site you read. CNN Stated that in the first quarter of 2009 National Median home price was at $169,000, other sites report as high as $250k but don't show when the data was collected. As 2010 goes on I assume we'll see more accurate data from 2009.

I know in my area values (with few exceptions) are back to what they we're in 1989 and that is not adjusting for inflation. Considering the truth about the job market as well as inflation that is bound to show up at some point I believe we are in for one wild ride.

Jeff