I don’t know what the median homeowner household income is and neither do you. Those stats are not readily available. The idea that you can derive it as being proportional to price is laughable. You are throwing out guesses. Also, there are a non-trivial number of households above the median who rent.
If we assume that people have to actually qualify for their loans based on income, I would conjecture that the buyers of median-priced houses are those above the median in income.
Would you agree ? disagree ?
Any realtors have insight into this ?
Regardless, here is another shot at getting my point across with a simpler example and fewer assumptions …
You are right that the median household income of 83K cannot afford the 600K house. However, over 21% of the households in Irvine have incomes over 150K and could easily afford the 600K house. In fact over 41% of Irvine households have incomes that exceed 100K per the 2005 Census bureau. These households would likely afford homes in 470K + range, assuming 20% down.
I believe that these incomes (if sustained) would support the median price in the 450-550 K range going forward.
Obviously this will be lower/higher depending on incomes, interest rates, unemployment, psychology, etc.
