Alternative headline: “Four areas so affluent that home prices and incomes are completely disconnected.”
Comparing the median sale price to house-buying power in all top 50 markets reveals that 4 markets are considered “overvalued”. “Overvalued” is defined by a market where the median sale price > house-buying power. Most markets still “undervalued.”
House-buying power is calculated by using a city’s annual median household income, assuming that a household spends one-third of their income on a mortgage, assuming a 5% down payment, and considering the current (Jan. 2022) 30-year, fixed-rate mortgage rate.
I’m shocked so much of the country is “undervalued” by that metric. I keep hearing prices are crazy everywhere, at least everywhere that would be nice to live.
Sacramento “undervalued” tells you everything you need to know about their lame formula.