Your payment and required salary figures seem high to me. In years 1 and 5, I compute monthly payments of $2,700 and $3,900 respectively. Assuming a 36% front-end ratio, then your annual salary figures are also overstated.
I think housing is still cheap compared to costs of renting, especially when you factor in tax benefits of owning. For example I am renting my $420K home (zillow estimate) in San Marcos out for $2,500/month. It would cost less than $2,300 to carry that property (PITI) with 20% down. After tax benefits the cost to carry is less than $1,900.
Therefore my opinion is that salaries won’t need to increase at the same rate as monthly mortgage (PITI) payments to support further housing price appreciation. A combination of catch-up in rent vs. buy analysis and salary increases will get us to 5% appreciation per year over the next 3-5 years.
