Check out this interactive graphic on USAToday.com. As Justin mentioned, I’ve been traveling, which means this morning I read USA Today cover-to-cover. (Thank you, Fairfield Inn!) That’s where I came across this piece, by Brad Heath, which tells us that even in 2007 nearly a tenth of all borrowers were taking on mortgages worth more than 4 times their annual household income. This is significant for three reasons:
1. The rule of thumb is you shouldn’t spend more than 2 1/2 times your income on a mortgage.
2. By 2007, we were already seeing property prices fall and foreclosures rise.
3. The rule of thumb is you shouldn’t spend more than 2 1/2 times your income on a mortgage.
Now, some might argue that plenty of people live in places where they had to pay that much money to buy a house in recent years. My question is this: Was Boise one of those places? The map isn’t super-crisp when you zoom in (use your right mouse button), but it seems like Ada County, Idaho had more than 12% of its borrowers taking out mortgages worth more than 4 times their income in 2007. That was up from fewer than 4% in 2000.
There are plenty of other surprises—check out Minnesota and Maryland. Worth a look, I’d say. And then a think.
Barbara!