So, if the double income household earns $200,000 a year
1) x 4 = $800,000
This 3-4x rule assumes the mortgage interest rate is 8%, if rates are lower, people could afford 20%-40% more
2) 20% more = $960,000
This 3-4x rule assumes the household incomes under $120,000, with $200,000 income level, people could afford more because tax sayings are more, and other living expenses are relatively less
3) 20% more = $1,152,000
Now that, with the increased number of the $200,000 income household in this area, people should have to pay some premium for a nice house
4) 10% premium = $1,267,200
5) 401k saving = less selling pressure
6) Inflation = long term support, short term pressure (but good for the fixed mortgage home owner)
no?
