Evaluations 1, Appraisals 0

[Joe Flacco]

According to Census data (Table H-3) for the 3rd and 4th quintiles of household income

$166,500 = 3.91x the 3rd quintile and 2.51x the 4th quintile in 2000

$257,400 = 5.15x the 3rd quintile and 3.25x the 4th quintile in 2007

$310,900 = 5.25x the 3rd quintile and 3.27x the 4th quintile in 2016 (which is where my income data source stopped)


Just sayin'

2000 = $166,500 income / $165,300 home price
2017 +/- = $310,900 income / $$328,600 home price

Similar ratio. Looks about right no?

 

[DTB]

Who, beside appraisers, really get turned on by this data (as accurate and helpful as it may be)?

Do the readers of the report really read and understand that part of the reporting? I have my doubts.

 

[George Hatch]

The income data I had stopped at 2016.

The median home price in 2000 was $165,300; 3rd quintile topped out at $42,233 and the 4th quintile topped out at $65,653
$165,300 / $42,233 = 3.91x median household income
$165,300 / $65,653 = 2.51x median household income

The median home price in 2007 was $257,400; 3rd quintile topped out at $49,968 and the 4th quintile topped out at $79,111
$257,400 / $49,968 = 5.15x median household income
$257,400 / $79,111 = 3.25x median household income


The median home price in 2016 was $310,900; 3rd quintile topped out at $59,149 and the 4th quintile topped out at $95,178
$310,900 / $59,149 = 5.25x median household income
$310,900 / $95,178 = 3.27x median household income

The 2018 median at $328k may be proportional to the 2018 median household income, but in any case the current multiplier is way more similar to the one from 2007 than the one from 2000.

Not to mention other segments of inflation that may be outpacing incomes, such as health care or food or energy. IRL, how much people pay for housing is usually determined as the residual after their other expenses.

My point is that I don't think home prices can get that far out in front of incomes.

 

[Joe Flacco]

The income data I had stopped at 2016.

The median home price in 2000 was $165,300; 3rd quintile topped out at $42,233 and the 4th quintile topped out at $65,653
$165,300 / $42,233 = 3.91x median household income
$165,300 / $65,653 = 2.51x median household income

The median home price in 2007 was $257,400; 3rd quintile topped out at $49,968 and the 4th quintile topped out at $79,111
$257,400 / $49,968 = 5.15x median household income
$257,400 / $79,111 = 3.25x median household income


The median home price in 2016 was $310,900; 3rd quintile topped out at $59,149 and the 4th quintile topped out at $95,178
$310,900 / $59,149 = 5.25x median household income
$310,900 / $95,178 = 3.27x median household income

The 2018 median at $328k may be proportional to the 2018 median household income, but in any case the current multiplier is way more similar to the one from 2007 than the one from 2000.

Not to mention other segments of inflation that may be outpacing incomes, such as health care or food or energy. IRL, how much people pay for housing is usually determined as the residual after their other expenses.

My point is that I don't think home prices can get that far out in front of incomes.

I get what you are saying.

Do you know what the median household income was in 1965 and 1980? Give me your income data source so I can take a look at it.

 

[Joe Flacco]

Who, beside appraisers, really get turned on by this data (as accurate and helpful as it may be)?

Do the readers of the report really read and understand that part of the reporting? I have my doubts.

Probably not. That's part of my dissatisfaction with the biz.

Edit: Maybe. Cus I can average almost $700 per report. Maybe I wouldn't have done that without the extra stuff.

 

[George Hatch]

I get what you are saying.

Do you know what the median household income was in 1965 and 1980? Give me your income data source so I can take a look at it.

The table I have (Table H-3. Mean Household Income Received by Each Fifth and Top 5 Percent, All Races: 1967 to 2016) breaks the income down into 5ths. It starts at 1967

https://www.census.gov/data/tables/time-series/demo/income-poverty/historical-income-households.html

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The top of the 3rd quintile in 1967 was $7,077, top of the 4th was $9902. The Q1 median in 1967 was $23,300
$23,300 / $7,077 = 3.29x
$23,300 / $9,902 = 2.35x

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The top of the 3rd quintile in 1980 was $17,071, top of the 4th was $26,078. The Q1 median in 1980 was $63,700
$63,700 / $17,071 = 3.73x
$63,700 / $26,008 = 2.44x

 

[Randolph Kinney]

Homes are paid out of income.

Borrowed funds, not income. Payments on 30 year mortgages in the beginning are almost all interest, not principle.

FHA, and some GSE mortgages are 3% down. VA mortgages are 0% down.

Like I said, the next economic downturn will produce many underwater mortgages. The moral hazard is already baked in from the last downturn.

 

[Randolph Kinney]

 

[Randolph Kinney]

 

[Randolph Kinney]

Total US household debt soars to record above $13 trillion

• Total household debt rose to an all-time high of $13.15 trillion at year-end 2017, according to the Federal Reserve Bank of New York's Center for Microeconomic Data.
• The report said it was fifth consecutive year of annual household debt growth with increases in the mortgage, student, auto and credit card categories.

The American consumer is loading up on debt.

Total household debt rose by $193 billion to an all-time high of $13.15 trillion at year-end 2017 from the previous quarter, according to the Federal Reserve Bank of New York's Center for Microeconomic Data report released Tuesday.

Mortgage debt balances rose the most in the December quarter rising by $139 billion to $8.88 trillion from the previous quarter. Credit card debt had the second largest increase of $26 billion to a total of $834 billion.

https://www.cnbc.com/2018/02/13/total-us-household-debt-soars-to-record-above-13-trillion.html