Housing is 4.35X income in Austin, is this healthy? (mortgage, loan)

[Uberguber]

median HH income is $59,433: Austin Texas Household Income | Department of Numbers

median asking price for housing: $258,560: Asking Prices and Inventory for Homes in Austin Texas | Department of Numbers

This equates to a factor of 4.35X for a median priced house on a median income. This flies in the face of the 3x rule.


These stats are from December of last year, since then median housing price has climbed to $282,990

Your thoughts - is this healthy? What will be the effect of this reality on Austin?

[thesonofgray]

I'm not sure if the two figures directly equate to how much home buyers have paid as a multiplier of their salary. Investors might be driving the price up.

The loan process is more stringent so I doubt many people are able to overextend their buying power.

[scm53]

Originally Posted by Uberguber

median HH income is $59,433: Austin Texas Household Income | Department of Numbers

median asking price for housing: $258,560: Asking Prices and Inventory for Homes in Austin Texas | Department of Numbers

This equates to a factor of 4.35X for a median priced house on a median income. This flies in the face of the 3x rule.

Faulty comparison. You are comparing median HH income from the entire metro area against house prices from Austin proper. Apples to oranges. Scroll down further, and you will see that Austin median family income was $73K - right at the 3X standard after a 10% down.

[janejanejanejanejane]

I think many, many people get to still overextend their buying power.

[Uberguber]

3.5X is still unhealthy IMO, and the median housing price has risen 10% since that time to $282,000(there goes that down-payment you were talking about) I think there's a fair amount of imported money sloshing around right now. Don't know if it's a good thing or a bad thing. I know that housing will lock up because of the low rates, and the middle class will have to choose between being house poor, or living modestly. I could see the middle class areas of Austin expanding because of this situation.

[scm53]

The other mistake you are making is equating purchase price to mortgage. Plenty of ways to buy that mortgage down well below the purchase price. Even down to zero.

[CptnRn]

Originally Posted by scm53

Faulty comparison. You are comparing median HH income from the entire metro area against house prices from Austin proper. Apples to oranges. Scroll down further, and you will see that Austin median family income was $73K - right at the 3X standard after a 10% down.

I agree. Faulty comparison.

median1.
denoting or relating to a value or quantity lying at the midpoint of a frequency distribution of observed values or quantities, such that there is an equal probability of falling above or below it.



There is absolutely no reason to believe that someone with a "median" income is buying a house with a "median" price. Does not happen.

Neither measure takes into consideration then numbers of houses available at the "median" value or lower values.

[Spacepup]

Originally Posted by janejanejanejanejane

I think many, many people get to still overextend their buying power.

Which is why it will be interesting to see what happens to the housing market as raising interest rates and new stricter lending qualifications (for banks to sell the loads to Fannie and Freddie) ratchet back their ability to leverage themselves to the moon.

[Novacek]

You're also comparing median incomes of everyone to median houses of those purchasing _right now_. Tons of current owners purchased when the median price was a lot lower.

[Austinite101]

Originally Posted by Novacek

You're also comparing median incomes of everyone to median houses of those purchasing _right now_. Tons of current owners purchased when the median price was a lot lower.

You took the words right out of my mouth.