It was the P/E stupid. It will always be the P/E stupid. Too bad people didn't understand that in 2004, 2005, 2006 and 2007. I bet they do now.
Here was how the numbers looked from Q3 2007. I'd love to see an update.
Percent Income: The percentage of the local median family income required to make payments on the mortgage for a median (sale) priced single family home given a 20% down payment and a 30-year fixed rate loan at prevailing rates.
Mortgage to Rent: The ratio of the mortgage payment on a median (sale) priced single family (again assuming 20% down and a 30-year fixed rate loan) to the local median rent for a 3 bedroom apartment.
Price to Income: The median single family home sale price divided by the median family income for the metro area.
Price to Rent: The median single family home sale price divided by the local median monthly rent for a 3 bedroom apartment.
| City, State | Percent Income | Mortgage/Rent | Price/Income | Price/Rent | |||
|---|---|---|---|---|---|---|---|
| Albuquerque, NM | 22.3 | 0.96 | 3.7 | 188.6 | |||
| Atlanta, GA | 15.9 | 0.86 | 2.6 | 169 | |||
| Austin, TX | 16.6 | 0.84 | 2.7 | 165.5 | |||
| Baltimore, MD | 23.4 | 1.23 | 3.8 | 241.2 | |||
| Boise City, ID | 21.8 | 1 | 3.6 | 196.6 | |||
| Boston, MA | 32.9 | 1.16 | 5.4 | 227.5 | |||
| Cape Coral, FL | 26.4 | 1.09 | 4.3 | 213.8 | |||
| Charlotte, NC | 22.3 | 1.18 | 3.7 | 231.2 | |||
| Chicago, IL | 25.1 | 1.27 | 4.1 | 250.6 | |||
| Cincinnati, OH | 13.9 | 0.76 | 2.3 | 149.8 | |||
| Cleveland, OH | 13.3 | 0.68 | 2.2 | 134.7 | |||
| Columbus, OH | 14.4 | 0.85 | 2.4 | 167.7 | |||
| Dallas, TX | 14.2 | 0.7 | 2.3 | 138.6 | |||
| Denver, CO | 21.7 | 1 | 3.6 | 196.8 | |||
| Detroit, MI | 11.4 | 0.71 | 1.9 | 140.5 | |||
| Edison, NJ | 27.9 | 1.27 | 4.6 | 249.2 | |||
| Grand Rapids, MI | 13.3 | 0.73 | 2.2 | 144 | |||
| Greensboro, NC | 17.7 | 0.8 | 2.9 | 158 | |||
| Greenville, SC | 18.4 | 0.9 | 3 | 176.7 | |||
| Honolulu, HI | 53.9 | 1.77 | 8.8 | 348.5 | |||
| Houston, TX | 16.6 | 0.77 | 2.7 | 152.1 | |||
| Indianapolis, IN | 11.8 | 0.65 | 1.9 | 128.2 | |||
| Jacksonville, FL | 19.3 | 0.9 | 3.2 | 177 | |||
| Kansas City, MO | 14.6 | 0.83 | 2.4 | 162.5 | |||
| Las Vegas, NV | 30 | 1.21 | 4.9 | 238.9 | |||
| Long Island, NY | 30.6 | 1.24 | 5 | 243.3 | |||
| Los Angeles, CA | 63.5 | 1.6 | 10.4 | 314.8 | |||
| Louisville, KY | 15.1 | 0.82 | 2.5 | 161.8 | |||
| Memphis, TN | 16.2 | 0.75 | 2.7 | 148.4 | |||
| Miami, FL | 46.8 | 1.25 | 7.7 | 245.4 | |||
| Milwaukee, WI | 21.5 | 1.28 | 3.5 | 252.6 | |||
| Minneapolis, MN | 18 | 0.99 | 3 | 195.7 | |||
| New Orleans, LA | 18.7 | 0.6 | 3.1 | 117.1 | |||
| New York, NY | 56.5 | 1.73 | 9.3 | 341.1 | |||
| Newark, NJ | 33.7 | 1.7 | 5.5 | 333.6 | |||
| Oklahoma City, OK | 14.8 | 0.81 | 2.4 | 159.1 | |||
| Omaha, NE | 13.4 | 0.74 | 2.2 | 145.1 | |||
| Orange County, CA | 54.3 | 1.68 | 8.9 | 329.7 | |||
| Orlando, FL | 29.6 | 1.24 | 4.9 | 244.8 | |||
| Philadelphia, PA | 21.4 | 1.02 | 3.5 | 201.2 | |||
| Phoenix, AZ | 26.4 | 1.14 | 4.3 | 224.3 | |||
| Portland, OR | 28.7 | 1.36 | 4.7 | 266.9 | |||
| Raleigh, NC | 20.1 | 1 | 3.3 | 196.2 | |||
| Reno, NV | 30.2 | 1.15 | 5 | 226.5 | |||
| Richmond, VA | 21.2 | 1.15 | 3.5 | 227.2 | |||
| Riverside, CA | 38.8 | 1.39 | 6.4 | 272.6 | |||
| Sacramento, CA | 30.5 | 1.12 | 5 | 220.9 | |||
| Salt Lake City, UT | 25 | 1.18 | 4.1 | 231.2 | |||
| San Antonio, TX | 17.6 | 0.78 | 2.9 | 152.6 | |||
| San Diego, CA | 51.8 | 1.7 | 8.5 | 335.4 | |||
| San Francisco, CA | 58.2 | 1.86 | 9.5 | 365.4 | |||
| San Jose, CA | 55 | 2.3 | 9 | 451.5 | |||
| Sarasota, FL | 30.5 | 1.34 | 5 | 262.7 | |||
| Seattle, WA | 31.8 | 1.55 | 5.2 | 305.7 | |||
| Spartanburg, SC | 16.1 | 0.87 | 2.6 | 170.6 | |||
| St Louis, MO | 14.5 | 0.83 | 2.4 | 162.4 | |||
| Tampa, FL | 24.7 | 0.99 | 4.1 | 194.4 | |||
| Tucson, AZ | 28.5 | 1.12 | 4.7 | 219.7 | |||
| Virginia Beach, VA | 24.3 | 1.11 | 4 | 219.1 | |||
| Washington, DC | 28.9 | 1.34 | 4.7 | 264 |
13 comments:
Seattle, WA
31.8
1.55
5.2
305.7
Ouch. Everyone knows it isn't as bad here as SoCal, FLA and NYC.
But damn, those numbers are still quite high. That 1.55 Mort/Rent ratio hurts, and the 305 price to rent is one of the highest!
And to think some people actually think that prices 'round here "aren't inflated".
Baloney.
America wants you all to live like immagrants, in 2 to 3 families in one house.
For Vancouver BC that would be
59.5%
1.7
10.34 (!)
363
sold house in oceanside, CA in 2005 for 495K now same identical model in my old neighborhood 2 of them are asking 259K now
P/E is too simple. You got to discount the E (divorce, kids leaving home, health, job loss).
You can do the discounting on an individual level for your decision and on a society level for looking at the whole market.
Society level:
- financial stress: more divorces
- kids born primarily by lower income families
- affluent population section graying
- job security decreased a lot
When housing prices lower to their pre-boom prices adjusted for 2008 dollar value.
We can either get to that point eventually after many more months of 1-2% price drops OR we can get there instantly IF all the mortgage lenders rewrite all their remaining mortgages to the real value of those homes.
Get a clue everyone, a 100k house in 2002 is only worth 140k in 2008 NOT 400k LOL. Only morons paid that much thinking they were gonna sell it off for 600k. Only in America can a 100k house be worth 400k even though there was nothing done to it and it's many years older.
Until houses prices drop to a realistic and acceptable level people won't feel like buying.
John McCain needs to read this post and start preaching it, he just might win the election.
Try some recent data. That data is 5 quarters old and doesn't represent the current conditions.
Atlanta's become affordable. Owning is as cheap if not cheaper than renting.
chrisguy said...
"Until houses prices drop to a realistic and acceptable level people won't feel like buying."
------------------
Until people feel secure that they will still have their job next month, they won't feel like buying, either.
-Mammoth
NYC is the in the top 10 of the explodometer. Here's what people are saying as to why it's "different here."
- It's the world financial capital
- Foreigners love NYC real estate. Remember the "Irish affect?"
- Immigration
- NYC is small, there's no more room to develop
Go ahead and keep buying New Yorkers, I dare you.
I used to think that Phoenix was the overpriced capital of the world. Now I look at NYC vs. Phoenix and Phoenix actually looks reasonable now. Looking at TCO for mortgage, insurance (much lower here) and taxes (also much lower here, especially Mesa) it is almost time to buy. Especially with the psycology so bad, you can pretty much get a realtor or seller to agree to anything you write on an offer letter - simply because it is an offer....
NYC is definitely going to be in pain - this seems to be a market of first in, first out. Phoenix crashed hard, but now sales are up and prices are stablizing a bit. Good riddance to all the crap. Now maybe things will be more sane. NYC - Prices still ridiculus, and unemployment due to Wall Street crisis - UGLY. At least we have purged most of our gamblers, illegals, bar tenders / realtors etc. Kind of nice around here these days. All the slugs are gone.
I could not agree more with the poster that comments that banks need to just write down the mortgages and be done with it. At least those folks will be able to stay in their homes. So what if they "got away with something". I would rather they get away with it, than to see the a$$hole executives walk with millions and in the process destroy the whole economy and jobs of those that did not gamble with anything. And Keith, you are right about arresting Angelo. That guy doing the purp walk would probably cause a 400 point rally in itself. Not to mention cheers from homeowners everywhere. What a jackass....
All what it takes for NewYorkers come stumbling down like a bunch of domino is another one of those 9/11 things or a tsunami coming from the cost of Africa. Impossible, you say ? I say it is possible, and very probable in the near future.
Yes, it made me giggle out loud. "I Still Haven't Found What I'm Lookin' For!"
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