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Started By
Message
Home Price to income ratio peaked in May
Posted on 9/28/22 at 8:17 am
Posted on 9/28/22 at 8:17 am
quote:
Historically, an average house in the U.S. cost around 5 times the yearly household income. During the housing bubble of 2006 the ratio exceeded 7 - in other words, an average single family house in the United States cost more than 7 times the U.S. median annual household income.
The Case-Shiller Home Price Index seeks to measure the price level of existing single family homes in the United States. Based on the pioneering research of Robert J. Shiller and Karl E. Case the index is generally considered the leading measure of U.S. residential real estate prices.
LINK
The home price to median household income ratio reached 7.78 in May, it then retracted to 7.76 in June.
For reference, this ratio peaked at 7.03 in November 2005. It reached that number again in October 2021 and had been setting new all time highs each month.. until now.
And by now I mean June 2022. The data lags by a few months.
12
Posted on 9/28/22 at 8:19 am to PhiTiger1764
It's crazy. We bought our house in May of 2019 and haven't done any renovations. Our realtor said he would list it now for $150k more than what we paid for it in 2019.
Posted on 9/28/22 at 8:21 am to PhiTiger1764
Yeah I look around and don't understand how people afford the shite they have.
Posted on 9/28/22 at 8:22 am to PhiTiger1764
quote:
Historically, an average house in the U.S. cost around 5 times the yearly household income.
Jesus, I'd be house poor
Posted on 9/28/22 at 8:22 am to PhiTiger1764
What are all of those periodic steep drop offs throughout?
Posted on 9/28/22 at 8:23 am to brewhan davey
quote:unless you live in central florida or Austin Texas that's not the case anymore bud. Maybe it was earlier this year but pricing are dropping like crazy now
It's crazy. We bought our house in May of 2019 and haven't done any renovations. Our realtor said he would list it now for $150k more than what we paid for it in 2019.
Posted on 9/28/22 at 8:25 am to Solo Cam
quote:
unless you live in central florida or Austin Texas that's not the case anymore bud. Maybe it was earlier this year but pricing are dropping like crazy now
Yeah I started noticing that around here (Nola). Should have jumped on it while we had the chance.
Posted on 9/28/22 at 8:26 am to PhiTiger1764
quote:
Historically, an average house in the U.S. cost around 5 times the yearly household income
I know the sentiment of the article is that 7x is too high but even 5x seems way too much. Wife and I's home cost 2.5x our combined income and, when factoring in property taxes + insurance, that seems like it'd be near my max.
Posted on 9/28/22 at 8:27 am to lnomm34
quote:
What are all of those periodic steep drop offs throughout?
It looks like these drop offs are typically from Nov/Dec to Jan. So maybe seasonal adjustments due to low buyer interest during the holidays? Just guessing…
Posted on 9/28/22 at 8:29 am to PhiTiger1764
quote:
Historically, an average house in the U.S. cost around 5 times the yearly household income.
Damn… I’m at about 2X gross income. I couldn’t imagine being at 5X.
Posted on 9/28/22 at 8:30 am to BenDover
quote:
I know the sentiment of the article is that 7x is too high but even 5x seems way too much.
Most of us live on the edge with monthly expenses with zero buffer.
Posted on 9/28/22 at 8:30 am to BenDover
quote:
I know the sentiment of the article is that 7x is too high but even 5x seems way too much.
I think it’s just a way to view the data . 5x is obviously way too high. But they are comparing median income to average house price, so I’d expect it to still appear high even in a normal market.
Posted on 9/28/22 at 8:35 am to GetCocky11
quote:
Yeah I look around and don't understand how people afford the shite they have.
I say this shite all the time. People must make WAY more money then I think they do......
Posted on 9/28/22 at 8:39 am to PhiTiger1764
Outside of being strapped and not building out an investment portfolio, I don’t know how people do it. We went 1x annual earnings in 2015 and I often feel poor.
Posted on 9/28/22 at 8:40 am to GetCocky11
Answer: Credit card debt for everything
Posted on 9/28/22 at 8:42 am to PhiTiger1764
it felt really good to close at around 2:1 with a great rate right before they started rising.
Posted on 9/28/22 at 8:44 am to PhiTiger1764
In the 1950s and 1960s you could build your own house for at most double your salary.
Posted on 9/28/22 at 9:50 am to GetCocky11
quote:
Yeah I look around and don't understand how people afford the shite they have.
Being involved with payroll/HR duties for several years, I learned that people will always sacrifice the future so they can live the life they want to know. Way too many people do not save for retirement, don't save for vacations, the inevitable big expense... They take out loans, and as soon as that loan is paid off; they are getting another loan.
Hell, at one point 20% of the people with 401k plans at my company had a 401k loan. 1 was for a down payment on a house, 2 were for cars, the other were for random large expenditures or help "catching up" with daily expenses.
Posted on 9/28/22 at 9:52 am to PhiTiger1764
Absolutely insane. I would never buy a million dollar house because our household income is above 230k.
Posted on 9/28/22 at 9:53 am to Areddishfish
quote:
In the 1950s and 1960s you could build your own house for at most double your salary.
Ah, the 50s — back when the second bathroom was a sign of prosperity
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