Last night I had dinner with some friends. They were telling me about their house hunting adventures, and one thing I was surprised at was how many million dollar houses seemed to be on sale here in Seattle. I thought to do some quick math to figure out if we are top heavy.
I took the census numbers for 2005 in Seattle to get a feel for the ratios of different income brackets. From the brackets I also derived the range of monthly payments possible (mortage + taxes + etc = 1/3 of gross income). From that I used a 6.01% 30 year mortgage with 20% to determine how much house that would buy. Finally I went to Windermere's site to get the sales numbers of those brackets. This is what the data looked like:
| Income Range | Household % | Payment Range | House Price Range | Windermere Count | Count % |
|---|---|---|---|---|---|
| 49,999 or less | 51% | $1389 or less | $225k or less | 91 | 3% |
| $50k to $75k | 17% | $1389 to $2083 | $225k to $350k | 527 | 17% |
| $75k to $100k | 11% | $2083 to $2777 | $350k to $450k | 574 | 19% |
| $100k to $150k | 12% | $2777 to $4166 | $450k to $675k | ~700 | 23% |
| $150k to $200k | 5% | $4166 to $5555 | $675k to $900k | ~400 | 13% |
| $200k plus | 5% | $5555 plus | $900k plus | 727 | 24% |
Ignoring the fact that making less than 50k pretty much disqualifies you from owning anything, the spike in million dollar houses did indeed manifest here. Although the number of households that could afford houses in the 675k to 900k range was similar to the number of households that could afford houses worth 900k+, the number of 900k+ homes were significantly greater. Are people making 200k+ twice as likely to own a home than households in the 150k to 200k bracket? The housing market seems to think so...
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