San Joaquin Homes Community Blog

Here's an interesting statistic from USN&WR's latest editorial.

"In the decades since WWII, home prices as a multiple of annual rent have generally averaged 15 times. In the recent bubble they reached a multiple of 26 and remain at 22."

The editorial's point is housing prices have a ways to drop yet to reach a level relative to personal income, at least not without the lax mortgage financing that produced the bubble in the first place.

In my own experience (in New Jersey), before the early 1970s Oil Crisis, 100 times the monthly rent was the cost of a house, or multiple of 8.3.

In those days the Savings & Loan banks required 25 per cent down, but 40 year loans were available.

Of course in the case of New Jersey, property taxes were high, which put downward pressure on house values. In the case of California with relatively low property taxes due to Proposition 13, a home’s value was higher. The point
being, people have only so much they can afford for a house, whether divided into the cost of the monthly mortgage or property taxes.

Submitted by Robert Sharp; November 13, 2008