If we go by 3x gross rule, a person with 50k income will live in a 150k house, a person with 200k income will live in a 600k house. The difference being, that the 600k house will be owned by the resident (it’s easy for him to save for the down payment), and the 150k house will be owned by an investor (it’s hard for the resident to save, so he’ll rent instead).

What’s your problem with this statement?

The part with the investor.. which is wrong because the unit has to cashflow for the investor. You are also taking the situation now after loose lending has blown up the prices on lower end houses.

@asianautica

So you’re saying in the 80s and 90s, when 20% and 3x income were the norm, the majority of cheaper area were bought by investors? I don’t buy that one bit.

I agree with this in part, but if you want the proper price comparison, look to a time before the Community Revitalization act (1977). 1990, we didn’t see 3x gross median income for median house. We were somewhere around 5x+.