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#31 dcengr

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Posted 26 January 2009 - 06:19 PM

How are you figuring that?


Calculate the median income of home owners in a given area. Its available in census data. Then you take 30-40% of that gross. Assume they have 20% down payment and back calculate what home they can afford. If the home prices of the home owners in that area can't afford the home they live in, then prices haven't hit parity yet.

This is true still in many areas. Some places its not. Its also conservative because not many have 20% down payment in california anyways. Avg home price still at $400-500k in most area means $100k in savings. Who has that in cash? Not many.

Also read this:

Rent rates dropping

Edited by dcengr, 26 January 2009 - 06:21 PM.

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#32 OEXCHAOS

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Posted 26 January 2009 - 07:13 PM

How are you figuring that?


Calculate the median income of home owners in a given area. Its available in census data. Then you take 30-40% of that gross. Assume they have 20% down payment and back calculate what home they can afford. If the home prices of the home owners in that area can't afford the home they live in, then prices haven't hit parity yet.

This is true still in many areas. Some places its not. Its also conservative because not many have 20% down payment in california anyways. Avg home price still at $400-500k in most area means $100k in savings. Who has that in cash? Not many.

Also read this:

Rent rates dropping


I think that the actual expense of owning is more important than the outright cost. People live in a home for a long time. They don't trade it every day.

Look at it the opposite way. Let's say 3 times gross income is affordable. If rates are, say, 20%, hardly anybody will be able to afford a home.

I think it's a big mistake to ignore that.

And I agree that out in Ca, home prices aren't affordable. Does anyone else know when they HAVE been? I don't remember it.

Mark

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