patrick.net
An Antidote to Corporate Media
1,260,867 comments by 15,055 users - FarmersWon, mell online now
invite responseComments 1 - 6 of 6 Search these comments
FortWayne
2011 Jun 6, 2:13am
Based on that income level, median house prices should be $285,000 in Santa Clara.
With a current median price around $500,000, we still have a LONG way down to go in the housing correction here.
Something is very strange about prices out there. Our neighborhood with around 40,000 to 50,000 household income, and yet we still have the same prices. (500 to 800 thousand)
Based on that income level, median house prices should be $285,000 in Santa Clara.
Why should it? The area doesn't want to sell their house at a huge loss, so by god, they're not going to. Only the bank kicking people out and offering up deals is going to make that area go down in price.
Based on that income level, median house prices should be $285,000 in Santa Clara.
How do you figure? On a traditional 20% down 30-year fixed, the bank typically requires a mortgage to income ratio of 28%, and an overall debt to income ratio of 36%. With historically low interest rates, even assuming 4.75%, that gives you almost a $400K ($393,625 to be exact) loan at $88K income. With 20% down, that's almost $500K (just a shade over $492K).
That does not mean that the person necessarily should take the largest possible loan, just that banksters permit it using traditional loan standards. The real problem is that these interest rates make no sense because of massive government subsidies, so when interest rates go up, 28% won't buy nearly so much.
At 8% interest, the loan size would be right around $280K, so with 20% down, that's right around $350K. I'm not saying that interest rates would be 8% without government subsidies, but a "normal" rate is more like 7-9%.
How come I could only see median household income in 2000? Are there more updated data on HHI?
larrypatrickmaloney says
Based on that income level, median house prices should be $285,000 in Santa Clara.How do you figure? On a traditional 20% down 30-year fixed, the bank typically requires a mortgage to income ratio of 28%, and an overall debt to income ratio of 36%. With historically low interest rates, even assuming 4.75%, that gives you almost a $400K ($393,625 to be exact) loan at $88K income. With 20% down, that’s almost $500K (just a shade over $492K).
Pre-bubble 200-300K would get you a SFH, 400K today gets you a small condo.....lots of room for correction.
How come I could only see median household income in 2000? Are there more updated data on HHI?
search for "(fill in metro name) year 2000 us census".
Patrick,
The Census has published data for 2010. I thought it would be fun, if you could write and post an enlightening report for the housing market in the much vaunted Santa Clara county CA, based on these numbers.
For example, according to this report, Silicon Valley has a median household income, of $88,000, which is huge compared to the rest of the country.
Based on that income level, median house prices should be $285,000 in Santa Clara.
With a current median price around $500,000, we still have a LONG way down to go in the housing correction here.
http://quickfacts.census.gov/qfd/states/06/06085.html
#housing