FIVE years after the crash in house prices are almost apply the overall financial system, US property market appears to be in rude health: the price has appreciated by 17% over the last three years. But the statistics that hide big differences in the housing market across the country. In San Francisco, thanks to booming technology and the supply is limited, prices have increased by 50% over the same period, and has now surpassed their peak in 2005. While prices in Las Vegas-where housing is built like billy-o lead to accident-has increased with the same number, they are still 40% below the peak.
As a measure frothiness, Economist have compared the price of the two metrics affordability: income and rent. On this basis, affordability looks stretched in San Francisco with prices nine times household income and nearly 20 times the annual rent. This compares with an average long-term city of six times earnings, and the national average of 3.3 for revenues and 11 for rent. By comparison, housing looks very cheap in Detroit and Pittsburgh in which the price is more than twice the income of an average household. Over time the price had to adjust (or equivalent income and rents will rise) to return the ratio of the average affordability for their long-term. But gauges affordability are influenced by interest rates, which is at an all time low, making housing artificially cheap to buy. As and when interest rates normalize, prices will face pressure to return to their long-term relationship with income and rents. But even if they stand firm, who would not prefer a small piece of silicon bumps San Franciscan rusting of steel Pittsburgh?
Explanation:
This interactive chart allows readers to compare the ups and downs of housing in the largest cities in the US as tracked by Zillow, property website, in five steps:
• House-price index: rebased to 100 on the selected date and nominally
• Real price: the price at $ '000 at 2015 prices (reduced by CPI),
• Price to earnings: the ratio of house prices to household income median
• Prices for renting: the ratio of house prices to rents annual private sector
• Percentage change: shows the inflation-adjusted price changes between two selected date
US house prices: realty check
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Oleh
rama olshop blogger
