Monday, October 03, 2005

Marin County House Price Adjusted by Income for the Years 1969 to 2004

The following graph plots the ratio of the average price of a house and per capita income for Marin County for the years spanning 1969 to 2004, inclusive. The green line shows the upper bound while the red line shows the lower bound.

(Click on the image for a larger view.)

This ratio (price/income) is basically a measure of housing affordability in Marin; the larger the ratio, the less affordable.

Just for fun... given the mean income of the average Marin resident as of 2004 (the last year for which I have complete data), how far would house prices need to fall so as to achieve maximum affordability based on the historical trend line for Marin (the red line)? Well, the calculated price/income ratio of roughly 13.1 for 2004 corresponds to a projected maximum affordability ratio of about 9.25 on that red line. To achieve that point the average house price in Marin would have to drop by approximately 30%.


Blogger Peter P said...

Since it is a ratio, should it be already adjusted for inflation?

Oct 3, 2005, 11:30:00 PM  
Blogger Marinite said...

Oh yeah (blush).

Oct 4, 2005, 10:09:00 AM  
Blogger Van Housing Blogger said...

Excellent graph. I lack good local data on incomes, so I can't really do anything similar for Vancouver.

Oct 4, 2005, 12:10:00 PM  
Blogger Marinite said...

I got my data from the US Census Bureau. Is there no analogous organization for you?

Oct 4, 2005, 2:31:00 PM  
Blogger David said...

Cool graph.

Oct 6, 2005, 9:34:00 AM  
Anonymous Anonymous said...

what is the link for the data you used from the US Census Bureau? I can't seem to find it.

Nov 9, 2005, 5:58:00 AM  
Anonymous Anonymous said...

First of all, great site, love the analysis. However, it is mortgage payments, not prices, that dicate the affordability in a given market. What would be more indicative is factoring in interest rates and their influence on this ratio. For instance, my number crunching tells me that from 2001-2003, affordability actually improved as prices went up (slowly, mid single digits) and rates fell from the mid 7s to the mid 5s. How about a payment/income graph?

Dec 6, 2005, 9:47:00 AM  
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