Rising Housing Costs Casts Long Shadow Over U.S. Car Industry
Contemplating yesterday's 2006 Census report on the average American's housing costs (via The New York Times), it appears that U.S. automakers' fears about the effects of the housing market on car sales are far from greatly exaggerated. The stats reveal that half of U.S. renters and more than one third of mortgage holders spent at least 30 percent of their gross income on housing. That's up two percent or 1.5 million households from '05. A staggering fourteen percent of mortgage-holders spent at least half their income on housing in 2006, up from 13 percent from the year previous. As The Grey Lady says, "The rising housing burden cuts into the money people have available for other expenses and anticipated the rise in foreclosures." To see how badly this trend will hit the auto industry, keep an eye on California sales. The Eureka state tops the list of mortgage borrowers forking over more than 30 percent of their income for housing.
Comments
Join the conversation
The falling housing prices are the problem. The market for luxury cars was goosed over the last few years by idiots taking out HELOCs to buy things like Hummers and bimmers, which they could not afford on their regular income Now so many people are upside down on their mortgages that we are going to see a contraction in auto sales. It will get worse when all those desperate to keep their houses attempt to sell their used vehicles.
Most of my friends (and I) in the SF Bay Area are living at home after college to save up for a 10% down payment... more if we're lucky, but that's a lot of money. No complaints; it's not a financially smart decision, I guess I like my family (and friends, and other contacts) that much. Something's gotta give though, and for me that means used cars. But it's not like the whole country's like this.
In my neck of the woods, the phrase "$200k house" refers to just the down payment. The flip side is that after the property taxes and mortgage payment, buying a $50k car seems like nothing.