I am using Clairemont as a proxy because I actually bought a home in Clairemont in 1996, within a couple months of the absolute bottom. ATtthat time, I figured out that I could buy a house there for about $200 above my rent, after accounting for taxes. Other areas will be different.
For a couple making 100-120K, they are in the 37% combined state/fed tax bracket, and they pay enough state income tax that they their itemized deductions are about the same as the standard deduction (meaning that any additional deductions are at the marginal rate).
Tax deduction on 2716/mo (interest & taxes) = 1000.
Effective monthly payment : 2100.
I ignored maintenance, but you can throw in a hundred bucks per month or so and it’s still pretty close.
I agree that some areas, such as Temecula, will likely go lower than this value because of the relative desire for some folks to drive less than an hour or two to work. And to pay less than $300 per month for A/C. These other costs IMO would make prices in a place like Temecula likely drop to several hundred dollars below equivalent rent.
So, yeah, I guess I knida agree with you.
Of course, if rates go up to 8% that puts in a lower bottom. Or if rents decline that also lowers the bottom.
