I've wanted to buy a house or an apartment for a while. But I've been a little confused and scared by the housing market and the current credit crisis. So I went looking for some data. What I found makes me glad I haven't purchased a home in NY metro in the last five years.
Median US household Income by metropolitan area.
Now look at this:
Median US home prices.
I'll save you the trouble of reading the whole thing. Here's a salient data point. Chicago has a median household income of $51,046. New York has a median household income of $50,795. (Who would have thought?) Oh, now look, in the fourth quarter of 2007, the median cost of a house in New York metro area was $457,400. What was it in Chicago? $261,000.
So Chicagoans on average make $251 more than New Yorkers every year, but their homes cost nearly half as much. I am not an economist. But common sense tells me that the median house cost must align with the median income of an area more than half of the time. When it doesn't align, the price will rise or fall in accordance with people's ability to pay. The cost of homes in Chicagoland pretty much appear to do that. A person who makes fifty grand a year could theoretically swing a mortgage to buy a quarter million dollar home. The same person absolutely can not get a legitimate mortgage on a house that costs almost half a million dollars.