I tried to calculate the bottom, so I tried three different methods:
1. My Mom and Dad bought their home brand new in 1968 for $22,500. At the time dad was making $2/hr & mom $1.75/hr...a total of $7,800/year and they were nothing fancy jobs. This was a "LOT" to pay for a home at that time and dads supervisor told him "Nobody that works at FMC can afford a $22,500 home!" If I use the same ratio to income...22k DIV by 7800 then IN SHORT THEY BOUGHT A NEW HOME FOR 3 TIMES THEIR ANNUAL SALARY.
......... 3 x 50K ANNUAL MEDIAN INCOME = $150K THAT A NEW HOME SHOULD COST...
2. The "rent" in an area for a newer 2000 sq ft family home runs 1000-1200. That suggests that IT IS THE MOST A FAMILY CAN AFFORD TO PAY TO LIVE!!! If you consider how much home $1,100 can buy you including PITI&I...then AN AVERAGE HOME SHOULD COST 140K-150K....................................................................................THERES THAT 150K # AGAIN!!!!!
3. Last, I used fannie/freddy's rule of thumb...No more that 33% of the monthly gross or 25% of the net after bills...since everyone these days has EXTREME BILLS, Everyone always knew that the banks would give you enough rope to hang yourself, so you cant go over 25% of your gross if you plan on repaying the debt and eating right?
SO... 25% OF 50K ANNUAL IS $1,041/MONTH..........$150K AGAIN!!!!!!!!!
IN CONCLUSION, IF i WORKED A FACTORY JOB, AND HAD IT LIKE MY DAD, THEN I COULD GO OUT AND BUY A BRAND NEW HOME ON A HUGE LOT FOR 150K, AND MY BOSS WOULD SAY, "YOU CANT AFFORD THAT FANCY HOME WORKING HERE" "YOURE NUTS"
BUT YOU CANT BUY A BRAND NEW HOME IN A 50K MEDIAN AREA FOR 150K...CAN YOU??? IT APPEARS TO ME THAT A NICE STICK BUILT HOME IN A NICE N'HOOD ROUGHLY 2000 SQ FT (5 BEDROOM CAPACITY RANCH) NEW IN A 50K MEDIUM INCOME COMMUNITY COSTS MORE LIKE 180-200! LETS SAY 190K FOR SAKE OF ARGUMENT, THAT MEANS THAT...
HOME PRICES NEED TO DROP ANOTHER 20 PERCENT !!!!!!!!!!!!!!!!!!!!!!!!!! COULD IT REALLY BE TRUE????
SCARY !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
WHAT DO YOU THINK ??????????????
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