This week the minimum wage increased for the first time in over 10 years, but there are some good reasons why having more money won't make much difference to homebuyers.

The Fair Minimum Wage Act of 2007 raises the minimum wage to $5.85 an hour from $5.15 an hour. Congress plans to phase in more increases every summer until the minimum wage reaches $7.25 an hour in the next two years.

According to estimates, about 1.7 million workers earned $5.15 an hour or less in 2006, so by the time wage increases are completed, about 13 million workers will be favorably impacted.

Some economists predict that employers will respond by trying to cut personnel, but others say that the minimum wage increase is long overdue. One estimate noted that the minimum wage was at a 52-year low when adjusted for inflation.

That's a lot of time and money to make up, and the new federal wage guidelines do neither.

If you are a minimum wage earner and want to buy your first home, you could be looking at paying about $180,500, the median priced home for first-time homebuyers. With a 10 percent downpayment and a fixed-rate loan of 6.67 percent counting private mortgage insurance, your monthly payment would be about $1,045. To qualify for a home in that price range, you'd have to be making an annual income of $50,160.

As a minimum wage earner today, you'll bring home about $12,168. By summer 2009, you'll earn $15,080. You'll still need another income or a co-signer, or you'll need to buy a far less expensive home than the first-time buyer is able to.

Other reasons why the wage increase won't impact housing is that some states have already raised their minimum wage much higher than federal standards. In Washington, the lowest wage is $7.93. In California, it's $7.50, and in Vermont, it's $7.53.

So, the workers most impacted will be those who live in states that follow the federal wage guidelines. That means housing affordability is still going to be a problem for many low-wage earners, and that keeps the pressure on first-time homebuyers and move-up homebuyers.

Published: July 25, 2007

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Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. For more articles by Blanche, click here.