A nation can't be financially strong if most citizens are financially weak. And we all want to live in a financially strong nation. And we all know that most people work their whole life and reach retirement age with little or nothing more than they started with. And we all know that the largest purchase people make is their house. Could too much house mean too little financial security at retirement? So how much house can you really afford?
There are many affordability calculators available. But let us try an independent source; the U.S. Government. At www.hud.gov, there is a linked affordability calculator. If you enter an annual income of $100,000 with no debts, it tells you that you can afford a house that costs 3.8 times your annual income. If you enter an annual income of only $10,000, it again tells you that you can afford a house that costs 3.8 times your annual income. (Need I mention that a person who makes $10,000 per year can not afford a house?) Their definition of housing expense is mortgage payment, property taxes, and property insurance. They ignore utilities, repairs, and maintenance. After accounting for these additional expenses, and considering the annual income tax deductions for property taxes and interest, HUD thus says that a person can afford to pay more than 50% of their net income for housing - a preposterous amount.
I should add that at age 69, I have never purchased or lived in a house that cost or was worth even two times my annual income. I have a fairly big house now, but the happiest time in my life was when 6 of us were in a 864 square foot house. How many square feet do you really need to lie on the bed and watch TV?
At first I thought that the HUD information was merely stupid but now I think it is worse than stupid - I think it is evil. I think that the government wants everyone up to their eyeballs in debt; after all, if everyone is working two jobs to try to avoid foreclosure, who has time to complain about bad government or stupid wars we can't possibly win?