Academic journal article Monthly Labor Review

Home Ownership in New England

Academic journal article Monthly Labor Review

Home Ownership in New England

Article excerpt

It is no secret that throughout the Nation high housing costs cause many Americans who rent to worry about their capability of purchasing a home, while others who do own a home fret about their ability to continue to afford it. From 1995 to 2005, house prices in New England increased by 85 percent; only in 2006 did they begin to stabilize. Heather Brome, from the New England Public Policy Center at the Federal Reserve Bank of Boston, examines the issue of housing affordability among young professionals in New England in a February 2008 Policy Brief, "Can young professionals afford to buy a home in New England?" Brome defines young professional households as those headed by a 25- to 39-year-old who has attained a minimum of a bachelor's degree and who is not presently a student.

Two primary calculations underlie the analysis. The first is the housing burden, which is the percentage of household income used to cover housing costs. The higher the percentage, the greater the financial burden is upon the homeowner. The second is income adequacy, which in this case is the ratio of household income to the income necessary to buy a house. This measure assesses how difficult it is for a household to purchase a home.

In New England in 2005, the median young professional household income was 14 percent greater than the median income for similar households elsewhere in the United States. …

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