A Wall Street Journal story this week addressed the renewed affordability of the nationwide housing market. Noting that prior to the housing bubble, the income of most homeowners was consistent with the price of their homes, the article offered a current look at owner income to property value comparisons.
In data compiled by Case-Shiller Home Price index co-creator Karl Case, who tracked a comparison of property prices with per capita personal income in 20 major metropolitan areas, it was revealed that most cities have now returned to “normal” ranges. In fact, real estate experts and potential sellers in some areas fear that prices will plunge to record depths.
On the flip side, “sanity” hasn’t returned to every metro area: For example, Los Angeles is one region that continues to boast a ratio of nearly 10 times (new home prices over buyer income). The WSJ article only addressed a handful of markets, and did not reveal data on the Atlanta homes for sale market.
The article stated that the stability of price-to-income ratios similar to the pre-bubble period, together with stagnant incomes and rising unemployment, suggest prices in many areas are about where they should be. Fortunately, buyer’s markets generally lead to increased public interest and a gradual (in this case, a very gradual) activity build-up; this, perhaps, is what sellers, agents, and brokers should bank on right now.