Years of Annual Income Needed

Written by Jim the Realtor

May 30, 2018

Are you thinking of moving out of California? Ohio is nice this time of year. 

Hat tip to daytrip! 

The rule of thumb long used by real estate agents and homebuyers is that you can afford a house if its price is equivalent to roughly 2.6 years of your household income. That ratio is based on historical nationwide averages under healthy economic conditions.

But today, in many places around the country—particularly in coastal cities in California and along the New York–Boston–Washington corridor—housing has become staggeringly more expensive than that.

Link to Full Article

1 Comment

  1. FreedomCM

    With interest rates historically low, the old “3X” rule is, IMHO, outdated. Probably 4X or 5X is more appropriate, even taking into account higher healthcare, for instance, costs these days.

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