Chapter 3The Mortgage Mess: It Ain’t Just Subprime—It’s Half of Americans in Overpriced Homes

Next to America’s pension poverty, the most baffling—and the least talked about—financial mystery is how Americans have managed to live in areas where homes are unaffordable—approximately half of the U.S. population. The recommended prudent ratio of household income to home price is not more than three times income. At the housing bubble’s peak in 2007, here’s what the ratio was in the following metropolitan areas: a multiple of 11 times the median wage in Boston, 13 in New York, 16 in Los Angeles, and 22 in San Francisco. Even if you assume that these households are two-earner families, the ratio is still too high. Some examples:

• It wasn’t ...

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