sustainable house price in Silicon Valley is $1,267,000

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?

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• With 3x house price increase, upgrade could afford a lot more -free2005- ♀ (4 bytes) () 06/27/2008 postreply 08:20:06