I’m trying to figure out the dynamics of the housing market, in preparation for looking at houses.

First of all, yes, I’m well aware that the market is still massively overpriced. Yes, I’m aware that the rent:own ratio is over 2, where it should be less than 1. Yes, I’m also aware that the credit contraction and plummeting interest rates mean that housing values will continue to drop, since people won’t be able to get as much credit. The only things fighting this trend are the faint hope (ha!) of massive inflation in the dollar, and the idea that foreigners with stronger currencies might want to keep our realty expensive for a while by purchasing vacation homes.

I’m also painfully aware that I feel like a transient in this apartment. I can’t set up a little shop, nor install raised beds. Yes yes, I could drive half an hour to a community garden … but history says that I don’t do that. Also, I can hear my neighbors flush. I desire to own a house again.

Anyway, thinking on these things this morning: The rule of thumb on a mortgage is that a family can pretty easily manage a mortgage between 2 and 3 times their annual (gross) income. This means (by and large) that houses in a neighborhood should cost 2 to 3 times the average salary in that neighborhood. Except that in the past 20 years or so, the majority of households have become dual income. If there was nothing else in play, that *ought* to increase the price of houses in that neighborhood by a corresponding amount. Same families, more money, more expensive houses. That’s how it works.

Mostly, I’m trying to figure out how savagely to underbid on this gorgeous house we saw this weekend.

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