I just read that in the LA times today too. They also said that wage/salary growth was 3.2%. That got me thinking so I looked at the housing affordiblity index from our friends at the NAR:
First I must say I think they fudged these numbers, look at the West:
– Average home price $356,500.
California is much closer to $500k if not over, but fine, this includes AZ, NV, OR, WA and maybe even ID.
– Median income: $61,078.
Any web based search brings in a number for California alone between $47k, to maybe mid $50’s. And of course this doesn’t count any undocumented salaries, which on average are more than likely much lower. CA is also higher than most other states.
The NAR claims an income of $86,064 needed to afford the median house price they gave.
Let’s just “assume” the avg price, and income above are correct.
At the wage growth given in the Times article of 3.2%, that rate will need to continue for 11 years before it catches up with the NAR avg home price above.
And that is of course assuming prices were stagnate those 11 years.
My guess, ignorant and uninformed as I am, is the worst is sitll to come.
