Housing Affordability Index

I was just scanning the NAR website at Realtor.org and found an interesting spreadsheat. It is their affordability index for 2002-2005. Besdies the obvious trend of plummeting affordability, it is amazing to see the discrepency in affordability throughout the country. What struck me is how crazy it is out West. Median priced home is $323,200 and Median family income is $57,849. The price is 5.58xincome. WOW! Not surprisingly, the index is lowest for the West at 80.8. Then comes the Northeast with median price home of 247,900 and median incomd of 63,334. A paultry 3.9x income with affordability index of 114. The South and Midwest bring up the rear. As an east coast guy, I can see why so many of the bloggers are from the West coast. It is outrageous. Even more outrageous than here on the East Coast. Anyway, it obviously the willingness of people to leverage themselves, along with easy availability to credit, which is causing this artificial demand. As interest rates rise, and the marginal buyers get squeezed, this thing will start to unwind. Anyway, it obvious that there is a lot more "chatter" about the bubble on the net. The R.E. bubble T shirt headline made it to Yahoo front page. However, until people hear stories that their friends lost money, the herd will not be stopped. Don't swim against a rip tide, to survive it's best to swim to the side. Keeping a close eye.

www.realtor.org/Research.nsf/files/REL0506A.pdf/$FILE/REL0506A.pdf