[quote=temeculaguy]The misleading part about median income to median house it it fails to chop off the bottom 1/3 of earners who will not be/should not be buyers. S.D. is historically in the 4-7x median to median with some sub 4 years and the most recent bubble hitting 11. Apartments dwellers are included in the median income but the apartments themselves are not included in the median sales price because they are not sold individually. So you are including players into the statistical game on one side of the formula yet they aren’t on the other side. If nothing was rented and all apartments were individually owned as condos the numbers would be true, the current formula is flawed.
S.D. had a worse median to median ratio than detroit and I’ll bet Hawaii is worse than S.D., history of a particular market matter, not national or rustbelt numbers.
In fact I ran Lahaina in Maui, 61k median income, 1.8 million median home price
If rt.66 is right and we get to buy a pad on maui for 2.5x median income, I’ll pack my shit right now.
I actually like Southwest Maui better (Kihei, Wailea, Makena) and the median there was only 54k, the good news is that houses were much cheaper, 850k median, so when I can get one for 125k, I wont even bother packing, I’ll get new stuff once I get there.
So a proven 100 year old housing affordability ratio (price x average wages) is no longer accurate because we have a new dynamic called renters and low earners to contend with?
If you chop off the bottom 1/3 won’t you logically chop off the top 1/3 as well? SD especially has lots of millionaires and even billionaires that throw the average way up.
Millionaires and billionaires are not players in the housing reality we live in but their houses and incomes are included in ratios.
Those apartment dwellers and renters are future first time buyers, a group housing cannot survive without. You can’t move up if others below are not moving up. So they most certainly are to be considered in housing affordability.
So Cal has gotten around historical affordability ratios with housing bubbles. No more though.
2.5-3 times earnings is a historically proven AFFORDABILITY gage. Meaning people can actually make their payments at those ratios.
SD average wage of $61k is probably high and even if not; wage deflation will probably bring it into the $50ks. Even 3x earnings at $55k aver. earnings is $165k for SD housing. So the HIGH end of affordability will probably be $165k.
Unbelievable? In 2006 how people would have thought you could buy a 2500 sq’ house in Temecula for $220k in 2009? Not many, and most would have thought the idea completely absurd. That rushed cut in prices was just the quick fall to “regular” prices. Now the discounts begin.
