patrick.net

The bubble is still there in many areas. Some of it is due to government constantly keeping it up, some due to other factors. Government isn't going to keep subsidizing them long enough, besides with Republicans swooping into the congress lately took away all the subsidizing.

It really is just a matter of time. Patients is rewarded if you wait a few more years. Free market won't let the prices stay up there, currently they are just unrealistic.

Let me get this straight, according to the article, prices are typically 24 months of pay. So areas where the median salary is ~$100k (Cupertino, MV, Sunnyvale, etc.), prices should only be $200k? Yeah, ok!

Here are the 30 year averages of price to median household income from HSBC’s A Froth Finding Mission: Detecting US housing bubbles for the Bay Area MSAs (circa 2005):
Oakland-Fremont-Hayward (MSAD) 5.9
SF - San Mateo-Redwd City (MSAD) 6.4
Six times definitely seems like a floor (at least to me) given the historic trend. Bear in mind they were 11x around peak.

Yes indeedy! 6x is the floor. The bay are is a reeeal bargain. 11x peak, that made sense.

But wait. Let me semi-randomly pick some other places (the following from City-data.com) -

Hampton VA
Estimated median household income in 2009: $46,440
x 2 years: $92,880
Estimated median house or condo value in 2009: $204,300
House / income: 4.399

Colorado Springs, CO
Estimated median household income in 2009: $52,984
Estimated median house or condo value in 2009: $213,800
House / income: 4.035

Boca Raton, FL
Estimated median household income in 2009: $68,254
Estimated median house or condo value in 2009: $393,400
House / income: 5.76

Fort Wayne, IN
Estimated median household income in 2009: $41,038
Estimated median house or condo value in 2009: $100,800
House / income: 2.456

Columbia, MO
Estimated median household income in 2009: $42,800
Estimated median house or condo value in 2009: $166,000
House / income: 3.878

Now, let's try the bay area:

Belmont, CA
Estimated median household income in 2009: $99,517
Estimated median house or condo value in 2009: $833,405
House / income: 8.374 (YOWZA!)

Berkeley, CA
Estimated median household income in 2009: $60,625
Estimated median house or condo value in 2009: $676,700
House / income: 11.16 (OMG!!)

Capitola, CA
Estimated median household income in 2009: $52,250
Estimated median house or condo value in 2009: $534,808
House / income: 10.235 (OUCH!)

Daly City, CA
Estimated median household income in 2009: $76,357
Estimated median house or condo value in 2009: $552,600
House / income: 7.23 (FINALLY something affordable - wait, it's a craphole)

Hayward, CA
Estimated median household income in 2009: $61,752
Estimated median house or condo value in 2009: $320,400
House / income: 5.188 (Now we're talking baby! Cheap!)

Mountain View, CA
Estimated median household income in 2009: $92,504
Estimated median house or condo value in 2009: $799,500
House / income: 8.64 (Buy now!)

Redwood City, CA
Estimated median household income in 2009: $67,611
Estimated median house or condo value in 2009: $782,400
House / income: 11.57 (But it's really not Deadwood Sh!!ty anymore!)

So I am seriously chastened. My old rule of thumb is gone. I am now thinking 4x family income is reasonable for a lot of this Country. I still think better parts of the bay area are reasonably a bit more.

I also see areas that are really not all that desirable in the Bay area still up above 8x.