Asked by Nrv, San Ramon, CA • Thu Apr 10, 2008
A lot of realtors have posted that "it is a great time to buy" in places like San Ramon. Yes, prices have dropped from the late 2005 peak, but they aren't inline with affordability fundamentals - i.e. housing shouldn't be more than 4 times your income, aka, if you make 100K, you can afford a 400K home, assuming minimal other debts. Even this 4X income level is a bit aggressive, but I'm willing to concede that level because San Ramon is a nice town with good schools and weather.
The average income in San Ramon from 2007 is $116,108, according to http://www.bestplaces.net/city/San_Ramon-California.aspx. According to Trulia, the average sales price from Jan-Mar 08 is 721,189. So, we are now at a 6.2 times income to housing cost ratio. In order to return to affordabilty fundamentals, average home prices would need to drop to $464,432, which is another 35% drop from now.
So, to the realtors and others, would you rationally explain why "its a great time to buy" in San Ramon?
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