In all the wrangling over credit, construction and confidence in this housing recovery, the real cost of owning a new home could come down to about the same amount as the cost of a new washing machine. One industry group claims just $1,000 makes all the difference.
"Each $1,000 increase in the cost of a new median-priced home price forces 206,000 prospective buyers out of the marketplace," reads the first line of a new report from the National Association of Home Builders.
NAHB researchers based their findings on the number of households that would not qualify for a mortgage (factoring income, debt, interest, property taxes and homeowners insurance) based on that price increase to a median-priced home. They varied state to state, with a low of 313 borrowers not qualifying in Wyoming, to a high of 18,250 in Texas.
"It all adds up. A thousand dollars means an additional monthly cost, based on someone's income. That may make the difference between owning and renting," said Robert Dietz, a tax and market analyst at the NAHB.
The NAHB is using the analysis to focus on the effects that building regulations have on affordability, noting that higher regulatory costs for builders are passed on in the price of a new home.
That said, the $1,000 figure is striking evidence of just how many Americans teeter on the edge of homeownership. The nation's homeownership rate continues to fall, as job and wage growth does not keep pace with home price growth.
Nationwide, home prices, including distressed sales, rose 7.5 percent in June 2014 compared with June 2013, according to a report released Tuesday by CoreLogic, a data company. This is a moderation in the double-digit price gains seen last year, but still represents 28 straight months of year-over-year appreciation.
"Home prices are continuing to rise fueled by ongoing tight supply, low rates and aggressive investor buying on the East and West coasts," said Anand Nallathambi, CEO of CoreLogic, in a release. "The expected surge in the number of homes for sale has not materialized to date, as many homeowners are staying put and waiting for better economic times and higher prices."
Supply issues are easing somewhat and should continue to moderate price gains, but other issues in the mortgage market are also keeping the price of home ownership higher. While builders complain of construction regulations, mortgage lenders argue they are being handcuffed by a still backward-looking housing finance system.
"Regulators today and Fannie and Freddie are still reacting to the financial crisis and trying to prevent taxpayer liability," said Anthony Hsieh, CEO of loanDepot. "New guidelines or rules are never published or disclosed. This puts everyone at a disadvantage. Lenders don't know how to help credit-worthy consumers become successful borrowers, and consumers don't know what they need to do or have to become successful borrowers."
They need to have $1,000 extra, according to the builders, but that is just one small part of a far more complicated housing recovery. Home buyers need good credit, sufficient down payments, proof of solid employment … or cold hard cash.