How Baltimore-area income stacks up with home prices
If you're curious how the median home sale price in the Baltimore region compares with the median household income these days (and how that compares with the past decade or so), have I got some charts for you. First, the one above, which really drives home how out-of-whack prices got as the housing bubble inflated.
First, a warning about a data limitation: I don't have household income stats past 2009 for the region, so I repeated the approximately $67,000 figure for 2010 and '11. (High unemployment tends to stifle income growth, so that's probably not far off. The estimates from the Maryland Department of Planning show median household income inching up by $400 in 2009.)
So: The median sale price more than doubled between 1999 and 2006, while the median household income rose 26 percent. It's not quite so far apart now -- prices are up 80 percent since 1999 and incomes are up 35 percent.
But what about the effect of today's low-low mortgage rates? How have monthly payments changed, and how does that compare with incomes?
Yeah, I've got those charts, too. Also one showing prices as a multiple of income.
The bottom line is that home prices appear a lot more affordable if you factor in mortgage rates, which were nearly 8 percent 12 years ago and last month were around 4 percent.
Check out these visuals:
Here's the change in monthly payments in the Baltimore region -- principal and interest only:
And those monthly payments as a percentage of before-tax monthly income in the region (again using the median household income figures):
This year's figure -- 19 percent -- is back to the level of 2001 and 2002, thanks to low interest rates rather than comparable prices.
The median home sale price is for September of each year (September's the most recent stat for 2011) from Metropolitan Regional Information Systems' stats arm, RealEstate Business Intelligence. The mortgage-rate information, also for September, comes from Freddie Mac's regular survey.
What strikes you as the best way to measure whether prices are low, medium or high compared with income?
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Comments
great post, I think your analysis is spot on. I'd add a chart comparing median income to rent costs in the city, which have risen steadily over the same time span (and continue to rise).
Posted by: direwolfc | November 4, 2011 9:10 AM
It would be interesting to expand this by looking at what kind of home the median payment would get you and then comparing that to other metro areas. Two metro areas may seem equally affordable when comparing median income to median payment, but the story changes when you realize that the median payment in Baltimore gets you a 1500 sf townhouse whereas the median payment in, say, Atlanta gets you a 2500 sf single family home.
Posted by: RIch | November 4, 2011 9:53 AM
Good suggestions, guys -- thanks.
Posted by: Jamie Smith Hopkins | November 4, 2011 10:06 AM
I always wonder how much our home prices are driven up by people who work in DC, but live here for the "bargains".
Posted by: BC | November 4, 2011 10:35 AM
My observation is the same with all the charts......"The Trend is Your Friend."
Posted by: elweedz | November 4, 2011 3:23 PM
I like these graphs - good info. Shame we couldn't get more historical data, would like to see how much price as a multiple of income fluctuated over time.
Posted by: postmodernben | November 21, 2011 4:09 PM