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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Tradelite who wrote (21495)6/10/2004 1:31:31 PM
From: GraceZRead Replies (1) of 306849
 
What you bring up is that all of this statistical info when taken as a snapshot doesn't tell you much about where house prices might go in the future. You have to know what the historical ratios are and how they change over time in conjunction with incomes and interest rates. As to median house prices, it could be that data points on the low end dropped out and while no single house rose 45% the median did because all a median is, is a halfway point between existing data points. If you have a dearth of supply on the low end coupled with increased supply/demand just above the median (builders don't want to build house below the median for instance) or if houses in one particular price point are being withheld from the market (Lizzie's 1.2 million dollar homes), than the median could be skewed higher or lower without wide spread price change in all price points.

I've heard that the average person can't afford the average house or that the median household income can't afford the median priced house for many years and in many different markets. Mostly you hear this in markets where house prices are rising the fastest which leads you to believe there is little correlation between this condition and house price declines. I heard it three years ago when the affordability index in most locations was at a statistical peak but the median household in CA still couldn't afford the median house. I think the index for the whole state was around 27%, which means only 27% of the households can afford the median priced house.
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