Today I want to talk about home affordability. If you look at Nebraska's Median Income and Home Values, I think homes in Omaha are very affordable. When compared to larger real estate markets like San Diego, CA, where median home values are out of line with incomes.
Let's look at home affordability in Omaha. When qualifying for a mortgage; lenders look at numerous different factors, but one is a housing ratio. Housing ratio is determined by taking your estimated house payment divided by your gross monthly income. Assuming a family makes $68,944 a year or $5,745 a month and purchases a $141,000 home, the estimated monthly payment would be$1,214 a month or 21 % housing ratio (well within the guidelines). Using the median income and house values for a San Diego property, the estimated monthly payment would be $3,908 a month or 56.4% housing ratio. I would be more concerned with home values falling to be in line with incomes in San Diego then Omaha, NE.
Median income and house value data provided by http://www.taxfoundation.org/ .
County | State | 2007 Median Taxes | Rank | 2007 Median Home Value | Taxes as % of home value | 2007 Median Income | Taxes as % of income | Rank |
Douglas | NE | 2,696 | 159 | 141,300 | 1.91% | 68,944 | 3.90% | 161 |
San Diego | CA | 2,770 | 144 | 556,500 | 0.50% | 82,944 | 3.30% | 259 |
Do you think there is more potential for home prices to fall in San Diego or Omaha?
Steve Lauver, Deeb Realty
Omaha Real Estate Agent serving all of the Omaha Metro area.