The "reversion to the mean" is going to hurt. Badly.
Of course, most of this pain is going to be felt on the coasts, where the Of Two Minds blog hails from. I live in a 1700 square foot house with almost an acre of land. I am thinking that my house would probably sell for $85,000, tops. That is like $50/sf. It is possible I am undervaluing it -- but not too much. In the nicest parts of Oklahoma City, prices go up to $80/sf. Compare my house to what you would find in California or Florida now. Look at these charts from the View from Silicon Valley blog (near San Francisco, CA). Look at the price per square foot. Condos are selling for about $450/sf and houses are selling for close to $500/sf. That is ten times what you would pay for a house here (or 6x what you would pay in the best areas of Oklahoma City).
Are incomes there six times ours here in Oklahoma? (Wait! Don't answer that!) I guess it's possible. Charles Smith of the Of Two Minds blog told me that an average waitress at a restaurant in Silicon Valley makes what an average attorney makes here in Oklahoma City. No wonder he needs to sell so many of his books.
For more good charts on the housing bubble, see this.
Of course, most of this pain is going to be felt on the coasts, where the Of Two Minds blog hails from. I live in a 1700 square foot house with almost an acre of land. I am thinking that my house would probably sell for $85,000, tops. That is like $50/sf. It is possible I am undervaluing it -- but not too much. In the nicest parts of Oklahoma City, prices go up to $80/sf. Compare my house to what you would find in California or Florida now. Look at these charts from the View from Silicon Valley blog (near San Francisco, CA). Look at the price per square foot. Condos are selling for about $450/sf and houses are selling for close to $500/sf. That is ten times what you would pay for a house here (or 6x what you would pay in the best areas of Oklahoma City).
Are incomes there six times ours here in Oklahoma? (Wait! Don't answer that!) I guess it's possible. Charles Smith of the Of Two Minds blog told me that an average waitress at a restaurant in Silicon Valley makes what an average attorney makes here in Oklahoma City. No wonder he needs to sell so many of his books.
For more good charts on the housing bubble, see this.
2 comments:
I had a big problem explaining housing costs out here in WA state (just across the border from Portland OR, although thankfully, I've moved back to the woods now.) In 2000, I bought a small house with a third of an acre for $104,000. The house was built in 1941 and had 880 sq ft. It was literally at the bottom of the housing market and there wasn't really anything with acreage in that price range. I sold out in June for $120,000 and my realtor was frustrated because she was sure she could get more for it if we held off. We went through four buyers before we closed.
It's not so much a problem with the mortgage costs. We did a fixed rate loan and did put up a down payment. The killer was the property taxes. Out of an $800 a month mortgage payment, $200 went to property taxes. And those kept going up with absolutely no increase in services in our area. While wages are not too bad in that area, it was tough to make payments when my salaried job disappeared in the tech bust. I was making $14 an hour at a call center and my husband was making $10 an hour as a custodian. Housing is definitely more affordable in Oklahoma.
Fred, thank you for the generous mention of my little novel. I can assure you that wages are NOT 8X those in Oklahoma. While it is true an astounding number of wage earners here make $100K+, the $700K house is still less affordable than it is for a person earning $20K in an area with $80K houses.
BTW waiters and waitresses can make big money here because the cost of meals is so high. People routinely drop $60-$80 for a 2-person meal, and $100+ is no big deal. That's a $15 tip right there.
Keep up the good work--charles smith
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