Kiplinger study: Home prices where you live

[Orchidflower]

I thought I would post this, and see what this board thought of this study.
Also, can someone explain how they figure out the "Affordablity Index" of each area to me. I could not find an explanation of how it was done.
Does this seem on target to you?

Kiplinger.com

[poboy]

* Kiplinger estimate. + Affordability Index: 1 (most affordable) to 10 (least affordable). ‡ Annualized. Sources: Fiserv Lending Solutions, National Association of Realtors, Office of Federal Housing Enterprise Oversight, U.S. Census Bureau


Very bottom of list

My city is a 3, son lives in LA, a 10. He has been trying to find a home for 5 years.

[haha]

Quote:

Originally Posted by Orchidflower I thought I would post this, and see what this board thought of this study. Also, can someone explain how they figure out the "Affordablity Index" of each area to me. I could not find an explanation of how it was done. Does this seem on target to you? Kiplinger.com

You rarely find a journalist willing or able to operationally define what his terms mean. Generally and depending on context affordibility relates house prices, median incomes and maybe income distribution in an area and mortgage interest rates to come up with a composite figure which is supposed to give a rough idea of how many median earning families in an area can afford o make payments on the median priced house.

To a retiree who brings her income with her it only seems important to give an idea of the likely house price stability of an area, and also an idea of the sort of life that people in that area lead.

The examples given in the article seem pretty good to me, given my limited to nonexistent experience in most of the markets mentioned.

Ha

[poboy]

Kiplinger estimate. + Affordability Index


I read your thread too quickly. Kiplinger estimate(whatever that is) sounds like a phrase used to baffle. As, "you know that Kiplinger estimate to replace my transmission got me confused."

[mb]

I recall other articles where the affordability index is discussed. As Ha mentioned I think that it takes both housing costs and local wages into account.

Compare the results for LA and San Jose. The average house in LA is $567k and the affordability index is 10. The average house in San Jose is $758k but surprisingly the affordability index is only 8. Assuming this is correct (I'm suspicisous of an error) then I would attribute it to higher wages in San Jose.

I don't think that the affordability is as much use to ERs as average housing costs because they are not earning a salary. For example if an engineer moves from Iowa to Silicon Valley he will probably get a signicant increase in compensation that will partially compensate for the increased cost of living. In that case the affordability index may be useful. But an ER is living off investments, pensions, SS, etc. and that is not going to change (unless the local taxes change) just because he wants to get away from mid-west winters.

MB

[Orchidflower]

Using cities I know: Dallas median price for a house is $157,000 and rates a 2; Houston median house is $155,000 and rates a 3--meaning Houston is 1 point more expensive than Dallas. Huh??
I sometimes wonder if these guys don't just make stuff up...

[REWahoo]

Housing Affordability Index
"Estimate of housing affordability based on the price of the median sale price of an existing single-family home, median income, mortgage rates and assumptions concerning down payment. Property taxes, and insurance."

[haha]

Quote:

Originally Posted by Orchidflower Using cities I know: Dallas median price for a house is $157,000 and rates a 2; Houston median house is $155,000 and rates a 3--meaning Houston is 1 point more expensive than Dallas. Huh?? I sometimes wonder if these guys don't just make stuff up...

The difference is that the affordability index takes incomes into account. So in your example the implication is that Dallas incomes are a bit higher.

Which I believe is true.

Also, regarding MartyB's point about LA and San Jose- I think the Kiplinger ratings are pretty good. Average family income in metro San Jose is quite a bit better. For a large metro, San Jose might well be the high wage capitol of America.

To nudge another thread about happy hunting grounds for men, you single ladies couldn't do much better than this. Plus the weather is nice so you can walk around most of the time showing off your stuff.

Ha

[HFWR]

Quote:

Originally Posted by haha The examples given in the article seem pretty good to me, given my limited to nonexistent experience in most of the markets mentioned. Ha

We can't let a little thing like that stop us...

[FinallyRetired]

I note that only Elmira, NY, and Odessa, TX, rate a "1." Elmira homes average 72k, and Odessa 65k. Good to know there are places like this in case everything goes to pot, Elmira or Odessa, here I come!

[haha]

Quote:

Originally Posted by HFWR We can't let a little thing like that stop us...

Exactly. Why try to reform at this late date?

BTW, when I looked at those affordability indexes I see that my view of what housing costs is warped by the fact that since high school I haven't lived anywhere even remotely "affordable".

Ha

[mb]

Quote:

Originally Posted by haha To nudge another thread about happy hunting grounds for men, you single ladies couldn't do much better than this. Plus the weather is nice so you can walk around most of the time showing off your stuff. Ha

I live in San Jose and there has been a lot of articles about this. One article made the point that there are lots of single, available men making six-figure plus incomes with "mid-western" family values (what ever that is) in Santa Clara valley that can't get a date because their aren't enough women. On the other hand the women seem to be able to pick-and-choose. There was a quote from one woman that went something like this "I don't want an engineer, I want a venture capitalist!" However not all the women agreed. One commented that all the men "Spend all their time working or if they're not working they're playing video games."

If DW ever decides to get rid of me I'll be in trouble

[Orchidflower]

Well, this is embarrassing. The answer was obvious. Thanks for all the help, people. Now I'm going to shrink into my corner and shut up.

[MikeD]

Quote:

Originally Posted by Orchidflower I sometimes wonder if these guys don't just make stuff up...

I "heard" that's the way the Kelly Bluebook for cars is formulated. Two guys sitting at a table saying "What do you think a '02 Accord is worth?"

Mike D.

[ziggy29]

Quote:

Originally Posted by MikeD I "heard" that's the way the Kelly Bluebook for cars is formulated. Two guys sitting at a table saying "What do you think a '02 Accord is worth?"

Well, if one is a buyer and the other is a seller and neither is under duress, that's as good a way to establish market value as anything.

[martyb]

Quote:

Originally Posted by SoonToRetire I note that only Elmira, NY, and Odessa, TX, rate a "1." Elmira homes average 72k, and Odessa 65k. Good to know there are places like this in case everything goes to pot, Elmira or Odessa, here I come!

I've driven through Odessa a few times, uhhh.....not a likely landing place for me. No offense to anybody here who might live in, or be from Odessa!

[REWahoo]

Quote:

Originally Posted by martyb I've driven through Odessa a few times, uhhh.....not a likely landing place for me. No offense to anybody here who might live in, or be from Odessa!

I'm familiar with the city. Probably a nice place to be from. The term "acquired taste" comes to mind.