North park flips… relatistic prices?

[pemeliza]

Thank you for clarifying this sdr. I like your version of 75th percentile buys an entry level home. So if the 75th percentile income is for argument sakes 75k then at 3x income the entry level house should be 225k. Can’t buy too much house for that in the better areas unless you get a major fixer but a condo should be no problem.

[sdrealtor]

Taking the median household income should be able to afford the median priced home a step further the corrollary is the the lowest income household should be able to afford the lowest priced home. Of course we know that is absurd.

I also think that 3X income is a bit dated and needs to be adjusted for different areas also. The first problem is with low interest rates (4.5%), a 3X income mortgage is extremely affordable at 18% of gross income. At a 7% interst rate it jumps to 24% of gross income which is a different matter. The other problem is regional variances. In 92009 a decent 4BR home starts around 650K and comes with a $7,000 annual tax bill. With 20% down PITI is about $3400. Where I grew up back east a decent 4BR home starts around 350K which sounds much better but comes with a $20,000 annual tax bill. With 20% down PITI is about $3100/month.

[sdrealtor]

Taking the median household income should be able to afford the median priced home a step further the corrollary is the the lowest income household should be able to afford the lowest priced home. Of course we know that is absurd.

I also think that 3X income is a bit dated and needs to be adjusted for different areas also. The first problem is with low interest rates (4.5%), a 3X income mortgage is extremely affordable at 18% of gross income. At a 7% interst rate it jumps to 24% of gross income which is a different matter. The other problem is regional variances. In 92009 a decent 4BR home starts around 650K and comes with a $7,000 annual tax bill. With 20% down PITI is about $3400. Where I grew up back east a decent 4BR home starts around 350K which sounds much better but comes with a $20,000 annual tax bill. With 20% down PITI is about $3100/month.

[sdrealtor]

Taking the median household income should be able to afford the median priced home a step further the corrollary is the the lowest income household should be able to afford the lowest priced home. Of course we know that is absurd.

I also think that 3X income is a bit dated and needs to be adjusted for different areas also. The first problem is with low interest rates (4.5%), a 3X income mortgage is extremely affordable at 18% of gross income. At a 7% interst rate it jumps to 24% of gross income which is a different matter. The other problem is regional variances. In 92009 a decent 4BR home starts around 650K and comes with a $7,000 annual tax bill. With 20% down PITI is about $3400. Where I grew up back east a decent 4BR home starts around 350K which sounds much better but comes with a $20,000 annual tax bill. With 20% down PITI is about $3100/month.

[sdrealtor]

Taking the median household income should be able to afford the median priced home a step further the corrollary is the the lowest income household should be able to afford the lowest priced home. Of course we know that is absurd.

I also think that 3X income is a bit dated and needs to be adjusted for different areas also. The first problem is with low interest rates (4.5%), a 3X income mortgage is extremely affordable at 18% of gross income. At a 7% interst rate it jumps to 24% of gross income which is a different matter. The other problem is regional variances. In 92009 a decent 4BR home starts around 650K and comes with a $7,000 annual tax bill. With 20% down PITI is about $3400. Where I grew up back east a decent 4BR home starts around 350K which sounds much better but comes with a $20,000 annual tax bill. With 20% down PITI is about $3100/month.

[sdrealtor]

Taking the median household income should be able to afford the median priced home a step further the corrollary is the the lowest income household should be able to afford the lowest priced home. Of course we know that is absurd.

I also think that 3X income is a bit dated and needs to be adjusted for different areas also. The first problem is with low interest rates (4.5%), a 3X income mortgage is extremely affordable at 18% of gross income. At a 7% interst rate it jumps to 24% of gross income which is a different matter. The other problem is regional variances. In 92009 a decent 4BR home starts around 650K and comes with a $7,000 annual tax bill. With 20% down PITI is about $3400. Where I grew up back east a decent 4BR home starts around 350K which sounds much better but comes with a $20,000 annual tax bill. With 20% down PITI is about $3100/month.

[CA renter]

[quote=sdrealtor]The other problem with using median income as a metric is what those with below median income are generally referred to as in many market. They are called renters. In most market, only a bit over 50% of households are homeowners. Logically the higher income folks tend to be the homeowners. While not perfect, it would be more accurate to use the middle of the upper 50% of households (i.e. the 75th percentile to compare to the median price home). The median income should be more logically compared to the entry level home price. I know this is far from perfect but its more accurate then median income vs. median home price IMO.[/quote]

If we can’t include the lower end incomes in calculating “affordable” housing, we also shouldn’t use the highest incomes, as these people might only pay 1-2X income (or less) if they are very high earners.

It sounds perfectly reasonable to me that the median household income should be able to afford the median priced home (or thereabouts) because these people DO live here.

The fact that we’re in an inventory-constrained market is largely due to the govt interference. That’s one of the reasons some of us are so frustrated.

[CA renter]

[quote=sdrealtor]The other problem with using median income as a metric is what those with below median income are generally referred to as in many market. They are called renters. In most market, only a bit over 50% of households are homeowners. Logically the higher income folks tend to be the homeowners. While not perfect, it would be more accurate to use the middle of the upper 50% of households (i.e. the 75th percentile to compare to the median price home). The median income should be more logically compared to the entry level home price. I know this is far from perfect but its more accurate then median income vs. median home price IMO.[/quote]

If we can’t include the lower end incomes in calculating “affordable” housing, we also shouldn’t use the highest incomes, as these people might only pay 1-2X income (or less) if they are very high earners.

It sounds perfectly reasonable to me that the median household income should be able to afford the median priced home (or thereabouts) because these people DO live here.

The fact that we’re in an inventory-constrained market is largely due to the govt interference. That’s one of the reasons some of us are so frustrated.

[CA renter]

[quote=sdrealtor]The other problem with using median income as a metric is what those with below median income are generally referred to as in many market. They are called renters. In most market, only a bit over 50% of households are homeowners. Logically the higher income folks tend to be the homeowners. While not perfect, it would be more accurate to use the middle of the upper 50% of households (i.e. the 75th percentile to compare to the median price home). The median income should be more logically compared to the entry level home price. I know this is far from perfect but its more accurate then median income vs. median home price IMO.[/quote]

If we can’t include the lower end incomes in calculating “affordable” housing, we also shouldn’t use the highest incomes, as these people might only pay 1-2X income (or less) if they are very high earners.

It sounds perfectly reasonable to me that the median household income should be able to afford the median priced home (or thereabouts) because these people DO live here.

The fact that we’re in an inventory-constrained market is largely due to the govt interference. That’s one of the reasons some of us are so frustrated.

[CA renter]

[quote=sdrealtor]The other problem with using median income as a metric is what those with below median income are generally referred to as in many market. They are called renters. In most market, only a bit over 50% of households are homeowners. Logically the higher income folks tend to be the homeowners. While not perfect, it would be more accurate to use the middle of the upper 50% of households (i.e. the 75th percentile to compare to the median price home). The median income should be more logically compared to the entry level home price. I know this is far from perfect but its more accurate then median income vs. median home price IMO.[/quote]

If we can’t include the lower end incomes in calculating “affordable” housing, we also shouldn’t use the highest incomes, as these people might only pay 1-2X income (or less) if they are very high earners.

It sounds perfectly reasonable to me that the median household income should be able to afford the median priced home (or thereabouts) because these people DO live here.

The fact that we’re in an inventory-constrained market is largely due to the govt interference. That’s one of the reasons some of us are so frustrated.

[CA renter]

[quote=sdrealtor]The other problem with using median income as a metric is what those with below median income are generally referred to as in many market. They are called renters. In most market, only a bit over 50% of households are homeowners. Logically the higher income folks tend to be the homeowners. While not perfect, it would be more accurate to use the middle of the upper 50% of households (i.e. the 75th percentile to compare to the median price home). The median income should be more logically compared to the entry level home price. I know this is far from perfect but its more accurate then median income vs. median home price IMO.[/quote]

If we can’t include the lower end incomes in calculating “affordable” housing, we also shouldn’t use the highest incomes, as these people might only pay 1-2X income (or less) if they are very high earners.

It sounds perfectly reasonable to me that the median household income should be able to afford the median priced home (or thereabouts) because these people DO live here.

The fact that we’re in an inventory-constrained market is largely due to the govt interference. That’s one of the reasons some of us are so frustrated.

[CA renter]

[quote=sdrealtor]

I also think that 3X income is a bit dated and needs to be adjusted for different areas also. The first problem is with low interest rates (4.5%), a 3X income mortgage is extremely affordable at 18% of gross income. At a 7% interst rate it jumps to 24% of gross income which is a different matter. The other problem is regional variances. In 92009 a decent 4BR home starts around 650K and comes with a $7,000 annual tax bill. With 20% down PITI is about $3400. Where I grew up back east a decent 4BR home starts around 350K which sounds much better but comes with a $20,000 annual tax bill. With 20% down PITI is about $3100/month.[/quote]

While interest rates certainly play a part, the 3X income rule existed during much better economic times — more job stability, more defined-benefit pensions, more employer-paid healthcare, wage inflation, etc. Perhaps it is dated because it’s too optimistic and assumes that people will have stable jobs and increasing wages? I think we should use 2X income. 🙂

[CA renter]

[quote=sdrealtor]

I also think that 3X income is a bit dated and needs to be adjusted for different areas also. The first problem is with low interest rates (4.5%), a 3X income mortgage is extremely affordable at 18% of gross income. At a 7% interst rate it jumps to 24% of gross income which is a different matter. The other problem is regional variances. In 92009 a decent 4BR home starts around 650K and comes with a $7,000 annual tax bill. With 20% down PITI is about $3400. Where I grew up back east a decent 4BR home starts around 350K which sounds much better but comes with a $20,000 annual tax bill. With 20% down PITI is about $3100/month.[/quote]

While interest rates certainly play a part, the 3X income rule existed during much better economic times — more job stability, more defined-benefit pensions, more employer-paid healthcare, wage inflation, etc. Perhaps it is dated because it’s too optimistic and assumes that people will have stable jobs and increasing wages? I think we should use 2X income. 🙂

[CA renter]

[quote=sdrealtor]

I also think that 3X income is a bit dated and needs to be adjusted for different areas also. The first problem is with low interest rates (4.5%), a 3X income mortgage is extremely affordable at 18% of gross income. At a 7% interst rate it jumps to 24% of gross income which is a different matter. The other problem is regional variances. In 92009 a decent 4BR home starts around 650K and comes with a $7,000 annual tax bill. With 20% down PITI is about $3400. Where I grew up back east a decent 4BR home starts around 350K which sounds much better but comes with a $20,000 annual tax bill. With 20% down PITI is about $3100/month.[/quote]

While interest rates certainly play a part, the 3X income rule existed during much better economic times — more job stability, more defined-benefit pensions, more employer-paid healthcare, wage inflation, etc. Perhaps it is dated because it’s too optimistic and assumes that people will have stable jobs and increasing wages? I think we should use 2X income. 🙂

[CA renter]

[quote=sdrealtor]

I also think that 3X income is a bit dated and needs to be adjusted for different areas also. The first problem is with low interest rates (4.5%), a 3X income mortgage is extremely affordable at 18% of gross income. At a 7% interst rate it jumps to 24% of gross income which is a different matter. The other problem is regional variances. In 92009 a decent 4BR home starts around 650K and comes with a $7,000 annual tax bill. With 20% down PITI is about $3400. Where I grew up back east a decent 4BR home starts around 350K which sounds much better but comes with a $20,000 annual tax bill. With 20% down PITI is about $3100/month.[/quote]

While interest rates certainly play a part, the 3X income rule existed during much better economic times — more job stability, more defined-benefit pensions, more employer-paid healthcare, wage inflation, etc. Perhaps it is dated because it’s too optimistic and assumes that people will have stable jobs and increasing wages? I think we should use 2X income. 🙂

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