As promised yesterdayhere’s an upgraded look at the “home that is cheap ” cost chart.
The present gap of $100,242 between the median price and the cost is comparable to the difference we saw between the two figures in March and April of 2006. This supports the argument that the slowdown in sales is due to a lack of value.
At August, a family would need to earn the median-priced $669,000 house in King County to $109,108 a year to be in a position to “ afford ”. This is up from the low of $46,450 at February 2012, but down slightly from the May high of 119,004. The cycle high in July 2007 was 99,321. The median family income in King County is estimated to be about $93,000.
This ’s the alternative view on this information, where I compare it to household incomes that are real, and reverse the numbers around to figure out the family income necessary to create the median-priced home cheap at now ’ s mortgage prices.
Within this chart I flip the factors in the affordability index calculation about to different areas of the equation to compute what cost home the household earning the median family income can “afford” to purchase at today’s mortgage prices, if they spent 30 percent of their monthly gross income on their house payment. Don’t forget that this mathematics involves the (giant) assumption that the house buyers are putting 20% down, which would be 133,800 at today’s median price.
The post The gap between cheap and actual home prices hit an all-time album in May appeared initially on Seattle Bubble.
If interest rates were 6% (around the pre-bust level), the income required to get a median-priced home would be 128,352–38 percent over the existing median income.
The “affordable” dwelling price has bounced around because the beginning of 2017 between approximately $550,000 and $590,000. The present “cheap ” home price of $568,758 from King County could have a monthly charge of $2,319.
If interest rates were in a more moderate amount of 6 per cent (that is still quite low by historic standards), the “cheap ” home price would be just $483,485–roughly $85,000 lower than it is now, and $185,515 under the current median cost.
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