Friday, February 01, 2008

How far can it go....

Housing prices are declining. Certainly not everywhere, and certainly not as much as some places, but if you were to take the median income and compare it to the median home price, it might give us an idea of how far home prices have gotten out of whack.

I took 33% of the median income and calculated a monthly payment based on 6% interest. Using that information, I calculated a price for a home. Compare that number to the median price where you live and you can determine if prices need to crash, decline, remain the same, or can increase further. In some cases, even if the local median is higher, you have to consider local issues and still, prices might be able to rise if incomes in the area are rising above average.

Real estate is local, local, local and every market has its good places, bad places and average places. Your mileage may vary, but places like California with prices hundreds of thousands above where they 'should' be, expect prices to decline.

Here is the list:



StateMedian incomeEstimated home price
possible for the
median income
Monthly Payment
United States48,023220,2701,321
Alabama 38,160 175,031 1,049
Alaska 57,071 261,771 1,569
Arizona36,693 214,170 1,284
Arkansas 37,458 171,812 1,030
California 54,385 249,452 1,496
Colorado 53,900 247,227 1,482
Connecticut 60,551 277,733 1,665
Delaware 52,676 241,613 1,449
District of Columbia 47,473 217,748 1,306
Florida 45,038 206,580 1,239
Georgia 48,388 221,945 1,331
Hawaii 61,005 279,816 1,678
Idaho 45,919 210,619 1,263
Illinois 49,328 226,256 1,357
Indiana 44,618 204,653 1,227
Iowa 48,075 220,509 1,322
Kansas 44,478 204,011 1,223
Kentucky 38,694 177,481 1,064
Louisiana 37,472 171,875 1,030
Maine 45,503 208,711 1,251
Maryland 63,082 289,343 1,735
Massachusetts 56,592 259,574 1,556
Michigan 48,043 220,362 1,321
Minnesota 56,102 257,328 1,543
Mississippi 34,343 157,523 944
Missouri 44,487 204,051 1,223
Montana 39,821 182,650 1,095
Nebraska 48,820 223,926 1,343
Nevada 51,036 234,090 1,403
New Hampshire 60,411 277,091 1,661
New Jersey 66,752 306,176 1,836
New Mexico 40,126 184,050 1,103
New York 48,472 222,330 1,333
North Carolina 41,616 190,883 1,144
North Dakota 42,311 194,070 1,164
Ohio 45,776 209,964 1,259
Oklahoma 38,859 178,237 1,069
Oregon 46,349 212,593 1,275
Pennsylvania 48,148 220,844 1,324
Rhode Island 52,421 240,443 1,442
South Carolina 40,583 186,144 1,116
South Dakota 44,996 206,386 1,237
Tennessee 40,696 186,663 1,119
Texas 43,044 197,433 1,184
Utah 55,619 255,111 1,530
Vermont 52,174 239,311 1,435
Virginia 55,368 253,960 1,523
Washington 53,515 245,461 1,472
West Virginia 38,029 174,431 1,046
Wisconsin 48,903 224,306 1,345
Wyoming 46,613 213,803 1,282

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