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This is a question about the uber wealthy Fairfield County towns and the statistical HHI.
For example, median home sales value in January 2013 in Westport was $1,231,300. Historically, median prices are around $1MM. Median HHI is $153,055. Using the old 3x income multiplier, HHI should be over $300,000 to match the median home prices.
If you multiply the HHI by 3, $450,000 does not get you much house at all in Westport.
It's even more dire in Darien/New Canaan.
I'm sure average vs. median HHI is a bit higher, but there seems to be a strong mismatch.
Does this indicate that there's a lot of "stretching" finances in these towns in order to afford to live there? Or is it just an anomaly in the numbers?
Any statistical experts want to shed some light on this?
I think it reflects the fact that there are a lot of longer term owners in places like Westport who could never afford to buy their houses today if they had to. They own them because they bought them a long time ago.
we have actually wondered about this too.the price of our condo is much more in line with our income. But we see the household income statistics and then look at the prices of homes in Westport and there seems to be some kind of disconnect.
I think it reflects the fact that there are a lot of longer term owners in places like Westport who could never afford to buy their houses today if they had to. They own them because they bought them a long time ago.
This is exactly what it is. While lower FFC is certainly wealthy and has some of the highest incomes in the nation/world, a lot of people have lived there for generations. Unfortunately with the extreme home prices, only the very wealthy can afford to buy there, so as the baby boomers continue to age, I think we'll see the HHI rise in coming years.
I know that when my parents sold their home, someone a lot wealthier than them purchased it. They could never have afforded the price that they sold it for.
This is exactly what it is. While lower FFC is certainly wealthy and has some of the highest incomes in the nation/world, a lot of people have lived there for generations. Unfortunately with the extreme home prices, only the very wealthy can afford to buy there, so as the baby boomers continue to age, I think we'll see the HHI rise in coming years.
I know that when my parents sold their home, someone a lot wealthier than them purchased it. They could never have afforded the price that they sold it for.
Makes total sense. My parents purchased in '88 and sold their first home in Westport in '02 and more than doubled their money. They never would have purchased the home for what they sold it for. When they decided to come back from Florida it was a much smaller home...
Dazzleman is spot on. Turnover is relatively low in most affluent towns, so few properties are actually exchanging hands relative to the housing stock. Most residents have been in place for many years and paid past prices which were much closer to 3-4x income. Families that are newcomers are generally well above the median HHI figure. Getting back to Stylo's question on statistics, while the median income is $161,000 (ACS 2011), the average income is over $266,000. A difference of $100,000 between median and mean is very unusual and captures the considerable ultra high earner bracket in town. Roughly 1,400 out of the 9,500 households (almost 15%!) take home in excess of $500,000 annually.
There were articles in the past that discussed this about adjacent Westchester County, NY which has a similar housing vs. income profile. Back in the 70s a lot of people retired to Florida, etc. and it produced housing turnover but this is going on a lot less now and people are keeping their homes (or coming back to them from Florida in the summer instead of living in a condo/staying at one of their children's homes, etc.). I've always been curious about this too.
i don't know that I would call it stretching to get into a town like Westport. Remember once you get above a certain point, there is a lot more discretionary income so you can use that for what you like. As an example, a family of 4 with an income of say $80,000 per year likely pays the same amount per year for groceries as a family of 4 with an income of $150,000. Same goes with a lot of different lving expenses. The old 3.0 rule does not apply. It was made up for middle income people who are really kind of just starting out with a minimal downpayment. Most people buying in Westport are not buying their first place or have a large amount of money to put down. You also have some trust fund babies in there as well whose income is really higher but is not recorded as such. Banks today are very cautious before lending a large amount of money to anyone. They are pretty certain that the borrower can afford the house they are buying which basically means they have the income or they have the downpayment. Jay
i don't know that I would call it stretching to get into a town like Westport. Remember once you get above a certain point, there is a lot more discretionary income so you can use that for what you like. As an example, a family of 4 with an income of say $80,000 per year likely pays the same amount per year for groceries as a family of 4 with an income of $150,000. Same goes with a lot of different lving expenses. The old 3.0 rule does not apply. It was made up for middle income people who are really kind of just starting out with a minimal downpayment. Most people buying in Westport are not buying their first place or have a large amount of money to put down. You also have some trust fund babies in there as well whose income is really higher but is not recorded as such. Banks today are very cautious before lending a large amount of money to anyone. They are pretty certain that the borrower can afford the house they are buying which basically means they have the income or they have the downpayment. Jay
All fair points, but the most significant matter is that most residents didn't pay 1.2mm for a home- that's just the median price for current transactions. Many residents have been in town twenty years of more, when prices were closer to a sensible multiple over income. Since they paid 200,000-400,000 for a property now worth $1.2mm, an income of $150,000 is completely do-able.
All fair points, but the most significant matter is that most residents didn't pay 1.2mm for a home- that's just the median price for current transactions. Many residents have been in town twenty years of more, when prices were closer to a sensible multiple over income. Since they paid 200,000-400,000 for a property now worth $1.2mm, an income of $150,000 is completely do-able.
You may be underestimating the property value growth slightly...
One home I know of was built in '87, sold in 88 for $650K. In 2006 it sold for 1.8 million... So it tripled. Truila has the current value as 1.6 million.
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