Affordable for Who!

Date of entry is really August 12, 2006!!!

The price of homeownership has been rising faster than income levels in much of the country which contributes to this problem that my family, as well as thousand of others, have been faced with. The low interest rate, albeit rising, environment has allowed people to buy homes that they wouldn't have normally been able to afford. Myself included. What's wrong with this picture? Interest rates have been rising at a conservative level for a year now and mortgage rates have, until recently, continued to decline. Would you have imagined ever seeing a 5%, 30 year fixed interest rate in the 1980's when rates were in the high teens! The spread on the 5 year ARM and the 30 year fixed became so close recently I wondered if anyone would dare lock an adjustable rate. We rolled the dice with -dare I say it publicly- an interest only, 3 year adjustable rate. I know experts are cool on the interest-only adjustable rate, but life events will force us from our two-bedroom, 1200 square-foot condo in another year or two when we, god willing, expand our family. For us, the interest only option made sense. To many others, its a risk.

The quest for homeownership has become an interest rate game more so than any other time in recent memory because of the unaffordability of many cities and towns. When we talk about $300 per square foot as being inexpensive for a condominium in the megalopolis, its tough for your "average Joe" to make a dent in the ownership arena. Lets not even mention the $1000 per square foot condominiums in Boston and New York. Its down right scary!