"A standard measure of housing affordability is the median home price divided by median family income. At a price-to-income ratio of 3, a median family could pay off a mortgage on a median home in about 15 years. At a ratio of 4, it would take more than 30 years. At a ratio of 5 or higher, it becomes almost impossible. As of 2006, the average price-to-income ratios in Hawaii and California were more than 8. Ratios in most other states with strict planning laws were between 4 and 5. Meanwhile, ratios in Georgia, North Carolina, and Texas remain between 2 and 3."
from article by Randall O'Toole
The median income of a family of four in Caldwell is around $40k depending on where you look and how current the data is. The median prices in Caldwell for a home got to be around $160k before the bubble broke. The ratio rounded down would have been a ration of 4. Not over the top expensive by California and Hawaii standards but near the reasonable limits people's ability to pay off a 30 year mortgage.
What some folks were willing to pay for a home was predicated on the false belief there would be no end to increased value in homes and if they didn't buy now they might never afford a home. It sure appears to be a buyers market at the moment and nobody is sure we are bottomed out on housing prices. The latest Case-Shiller housing index numbers are down for yet another month.
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