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Report: DC Home Prices Outpace Median Income At a Rate of 5 to 1
It is no secret that housing prices in DC have risen impressively since the end of the recession. Now, a new District, Measured analysis is adding another dimension to this pattern by exploring how median family income has related to median home price in DC over the past 25 years.
District, Measured found that between 1991 and 2000, the growth of median income and home prices was largely parallel, both in DC and the rest of the country. However, the post-2000 housing bubble marked the beginning of runaway home price increases — particularly in the District, where a strong public sector helped the market withstand the recession.
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Family income, however, has not been able to keep up with home price growth since 2000. The median home price in DC rose 125.6 percent between 2000 and 2006, from $198,550 to $447,850; median family income rose only 34.5 percent.
The National Association of Realtors’ (NAR) Affordability Index is another way to correlate median family income with the needed income to buy a median-priced house. An index of 100 indicates that the median income completely covers the amount needed to purchase a median-priced house or condominium; any points above or below 100 indicate how much median family income exceeds or falls short of the income required.
Nationwide, the Affordability Index has risen over 50 points from what it was in 1991, to 184; DC’s Index dropped 10 points in that same span. According to Moody’s Analytics, the index in DC was 115.1 in 1991 and has mostly hovered around 100 since 2009 — stability that District, Measured attributes to historically-low mortgage rates. The index was 105.4 at the end of 2016; if the interest rate had risen a percentage to 4.9, the index would have dropped to roughly 95, all else being equal.
See other articles related to: dc home prices, dc housing prices, median price
This article originally published at https://dc.urbanturf.com/articles/blog/report_dc_home_prices_outpace_median_income_at_a_rate_of_5_to_1/12630.
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