I have been following the housing market in the area, with the ultimate intent of purchasing a house. However, I have found that the market here is ridiculously overpriced. The Virginian-Pilot reported that in February 2007, median home prices were approximately $244,0000 in the area. That was an increase of 31.5% from 2005. That article stated that median prices went up on average from $170,000 to $220,000 in one year! Another tidbit on this would be that median income increased 20% to almost $52,000 during a comparable period.
All this information brings up a lot of concern. Housing prices have appreciated well in excess of household income. This means that people are becoming more leveraged and are incurring greater financing costs to purchase the same house. I would wager that the median family's net worth has not increased though - as many are using the increased home values for consumption via home equity lines.
The worst part about this appreciation in home values is that it has made it too costly for me to purchase a home at this point. The problem is that if one looked at what you can purchase for the median home price in the area - you have two options: (1) an hour plus long commute; or (2) living in a not-so-desirable neighborhood. So if you wish to avoid that, you're looking at $300,000 + for a mediocre piece of property. Now I make above the median income, but not that much more, and there is no way in hell that I am paying $300K for a dumpy house in a working class neighborhood.
Call me a snob, but I also learned a hard lesson from personal experience and professionally as a former stock broker; that is the first rule is "Never overpay for the merchandise." I have made inquiries with several real estate snake oil salesmen. I mention to them that I'm a CPA, make slightly above the median income, and would like a house in a good middle class neighborhood with fellow professionals, good schools, etc that is less than a 40 minute drive to work. Well, essentially I found out is that unless I want to shell out $350K, I can forget the bourgeois dream here for now. I find it ridiculous to pay in excess of five times my annual gross income for real estate.
This has to change as it is unsustainable. However, markets can remain irrational longer than I can remain solvent. I have seen a lot of markets with better economic fundamentals and better median incomes that have substantially lower housing prices, and if things don't correct, many job seekers will avoid this area due to it's overpriced housing market.
All this information brings up a lot of concern. Housing prices have appreciated well in excess of household income. This means that people are becoming more leveraged and are incurring greater financing costs to purchase the same house. I would wager that the median family's net worth has not increased though - as many are using the increased home values for consumption via home equity lines.
The worst part about this appreciation in home values is that it has made it too costly for me to purchase a home at this point. The problem is that if one looked at what you can purchase for the median home price in the area - you have two options: (1) an hour plus long commute; or (2) living in a not-so-desirable neighborhood. So if you wish to avoid that, you're looking at $300,000 + for a mediocre piece of property. Now I make above the median income, but not that much more, and there is no way in hell that I am paying $300K for a dumpy house in a working class neighborhood.
Call me a snob, but I also learned a hard lesson from personal experience and professionally as a former stock broker; that is the first rule is "Never overpay for the merchandise." I have made inquiries with several real estate snake oil salesmen. I mention to them that I'm a CPA, make slightly above the median income, and would like a house in a good middle class neighborhood with fellow professionals, good schools, etc that is less than a 40 minute drive to work. Well, essentially I found out is that unless I want to shell out $350K, I can forget the bourgeois dream here for now. I find it ridiculous to pay in excess of five times my annual gross income for real estate.
This has to change as it is unsustainable. However, markets can remain irrational longer than I can remain solvent. I have seen a lot of markets with better economic fundamentals and better median incomes that have substantially lower housing prices, and if things don't correct, many job seekers will avoid this area due to it's overpriced housing market.
