Income and Housing Ratios

2000
$35,732 = Median Household Income
$103,200 = Median House/Condo
=2.89 yrs of HHI per House/Condo

2005
$36,699 = Median HHI
$194,300 = Median House/Condo
=5.29 yrs of HHI per House/Condo.


Income increased only 2.7%, which is a loss when adjusted for inflation, while housing prices increased 88.3%!


What's more bizarre is that even after the past 20 months of price declines, the Zillow Orlando Price Index for today, March 16th, 2008, is $218,500- 12.5% more than these figures from 2005, which were taken before the 2006 price peak.

I don't think a doubling of housing prices in 7 years accompanied by a 10% increase in wages (a generous estimate) can be sustained. Either income has to surge, or housing prices have to fall.

Now you can see why the fed is "increasing liquidity" and commodities are soaring. Inflation is the most manageable of two evils today- and coincidentally, easier for politicians to swallow than a hard recession before the election.