Home prices in the United States were around 2.9 times a buyers income from 1985 to 2000, in a study reported on Zillow.com
The study conducted by Zillow.com reviewed the “Relationship between local incomes and home values over time, pinpointed the historic norm, and compared today’s price-to-income ratio.”
The ratio changed over the last decade where home prices peaked nationally around 5.1 times a buyer’s income. Since the the bubble burst, the nations average is closer to 3.3 times a buyer’s income.
It is important to note that this ratio can change in a region as a result of fundamental shifts in employment base, etc… As Raleigh stabilizes, it may not go back to it’s historic norm as they have marked it.
Raleigh home prices appear 5% above their historic norm previously set between 1985 and 2000
So, is it a good time to buy in the Raleigh Market?
The fact that they show Raleigh as above the norm reflects what we are seeing in our market: Home prices are still moving backward. Now think in terms of the ideal scenario of buying at the bottom and selling at the top. It’s just that, an ideal. Ask an investor and they will tell you that you buy on the way down AND on the the way up, selling as you go.
People are continuing to move to our area and projected growth for the Raleigh area remains high.
We may not have hit bottom, but my research shows me we are close. Factor in the low cost of financing and it’s a no-brainer for a home buyer with plans to own their home for 5 years or more. I would be cautions if you don’t have any longer term plans.
For those of you in the Raleigh area considering selling, determine your goals. Waiting a year or two won’t do you any good. If you are going to wait, I suggest you think 3 to 5 years out. Even as home prices hit bottom, our supply of homes for sale is still very high. We can expect home prices to stay relatively flat for some time with little appreciation.
Read more from the study by Zillow.com: http://www.zillow.com/blog/2011-01-11/zillow-names-10-best-places-to-invest-in-2011/