[quote=wallers]I am wondering who the buyers are as well. If someone here makes an above average living (for here) but still has to stretch to afford an average or less than average small home (with the last few years increase) it makes me wonder what is going on and if a price correction will be coming. Looking at incomes and housing prices it does not pencil out unless it’s all driven by outside investors. Who will come and go but when they go prices go down. From what I see it is cheaper to rent than buy now (much cheaper) so that seems off as well.[/quote]I think it’s more important to compare mortgage vs rent instead of mortgage vs income. Rent tells you how much people in a particular area are will to pay for shelter. So, if you want to live in that particular area, you have to compete with other people in your area. There are a myriad of reasons why people are will to spend different amount for shelter and people in different areas spend differently.
The reason I like using rent as a barometer is because people don’t put an ownership premium on rent. So, you tend to get a more pure view on how much people in the area are will to spend for shelter. If your mortgage is less than rent, then I would say, go ahead and buy, especially if you’re intending this to be your forever home. Worse comes to worse and you have to move, you can always rent it out for more than your mortgage.
