Vickie Elmer, of the New York Times recently reported that “About a third of the 65-and-older households that owned a home in 2009 had a mortgage, according to the Census Bureau’s American Housing Survey, which also put homeownership in this age group close to 81 percent during the second quarter of this year.”

“And lenders … expect to see a debt-to-income ratio of no more than 40 or 45 percent…”

What does that do to the value of housing that a “senior” can afford?

If retirement income is $2,000 per month, and 45% of that can be sued for “debt” then housing debt should be capped at about 31%. 31% of $2,000 is $620, and if the interest rate is 5% over a 30 year amortized loan, that’s $115,000 (before taxes and insurance are factored in.

Better go buy that REO house in the California central valley now.

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