According to a Harvard Study Housing is Becoming Less Affordable

This is not good news for the US in part because it is home ownership that stabilizes neighborhoods and builds communities. Not to mention that there is no need for parts of the population to feel disenfranchised by not being able to own a home. More from CMMMoney.com:

Home prices may have fallen this year, but a new study says housing has become more unaffordable. . . . .According to the 2007 State of the Nation's Housing report from the Joint Center for Housing Studies of Harvard University, 17 million of American households in 2005 were putting more than half their income into paying for shelter - a rise of 1.2 million from the prior year, and a jump of 3.2 million from 2001.

Three main factors intersect to affect affordability: mortgage rates, income and prices.

Mortgage rates have generally been a favorable part of the equation. Since the start of 2001, they've ranged from an average of 5.23 percent for a 30-year fixed in June, 2003 to 7.16 percent in June of 2006. . . .

Median income, however, has dropped. Real wages fell from 2000 to 2005, according to the report. By 2006 household income was 1 percent below 1999 levels, according to stats from the Current Population Study of the U.S. Census Bureau.

Wages dropped but mortgage rates held steady; affordability shouldn't have suffered too badly if the third part of the equation - housing costs - remained stable.

But they didn't. Single-family home prices skyrocketed, from an inflation-adjusted median of $154,563 in 2000 to $221,900 in 2006, according to the National Association of Realtors (NAR), for an increase of 46 percent.

According to Drew, the affordability decline trend cuts across all incomes. The bottom 25 percent of earners have been hit hardest, but even among the top quarter, the number of households that devote more than half their incomes to housing costs has increased.

That trend accelerated through the housing boom. By 2006, homeowners paid a median of 25.4 percent of their incomes to mortgage payments alone, according to the Harvard study, up from 18.9 percent in 2003.