This week's Village Life reported that El Dorado Hills is number 77 in Money Magazine's "best places to live" and Granite Bay was 74.
They reported that the EDH median family income was around 116K. The median home price was reported to be 672K.
Late last night I had already done some math using a rough average between Folsom and EDH median home price as reported by DataQuick for June 2007. I looked at what the monthly payment on a 550K loan would be, then extrapolated to figure out what the family income would have to be for the monthly payment to be 3x income. I have a range since I wasn't exactly sure how to treat the tax situation.
Results: For a 550K loan (property tax at 1.25% and no HOA) a family would have to make between 145K and 175K!
So just where are these median folks getting the money for their median houses? Its not their income. Must be all those pesky new-fangled loan products!
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7 comments:
I've done these calcs also in the areas that I've been looking and I've been asking this question since 2003.
I haven't heard a good answer.
I think the market will provide the only answer that matters.
You know what's really scarey?
The median household in EDH can't afford the median house in SACRAMENTO. I make a little less than median household income for EDH, and prior to renting up here I had decided that I couldn't afford homes in the classy neighborhoods of Foothill Farms and the Vineyards area of South Sac.
Very few people can afford ANYTHING decent in the entire region. I only have two mouths to feed on my income, one car payment, and no credit card bills. I don't know how people with kids can possibly live the lifestyle that I see up here.
The obvious answer is that most of these people bought homes (somewhere, not necessarily where they are living now) before the huge inflation of property values and have accumulated equity. Most current homeowners probably don't have mortgages that reflect the current value of their homes. It's usually the case that the last people to move into a neighborhood are the most affluent. If you buy a house in Midtown or East Sac today, you might be living next door to a Harley-riding, beer-guzzling janitor (not that I have anything against janitors) who bought his house 15 years ago for $90K.
But weren't many of the houses in Folsom and EDH built in the last 8 years or so? (When I lived here in the late 90's after college I never made it out this far into the burbs, so I don't remember how much was here prior to the RE boom.)
Buyers often bring equity (larger down payments) when buying a higher end home.
Sippn
Are you saying that the "median home" in Folsom or EDH is a higher end home?
"But weren't many of the houses in Folsom and EDH built in the last 8 years or so?"
Definately, or the last 10 years. But still, most of it, In El Dorado Hills at least, was built up prior to the last 4 years or so when prices became really inflated. I can still remember prices for VERY nice homes in Governor's and Ridgeview going for around 300k (think 700-800k now). So I'd agree with anon1137 that a lot of is was indeed bought before the runup.
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