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A simple problem of logic

housesSeems odd that more people don’t seem to spot the logical – economic – problem inherent in this bit of information, from a lead story in today’s Seattle Times.

The nut graph, referring to King County: “A typical household would have had to bring in 46 percent more income in 2005 to afford a median house, a huge leap from 2004, according to an annual report released Wednesday.”

Put another way. The median income in King County in 2005 was $60,500. Based on usual household economics (the normal rule of thumb that you can reasonably spend up to about 30% of your income on housing), that means the median affordable house would cost $228,100.

But in 2005, as it turns out, the median priced house in King County was tagged at $332,000.

Which would be affordable if the median income were $88,400, but, of course, it isn’t – isn’t close. How does this compute?

Once again we ask: How are people able to afford so many very high-priced houses? And isn’t a housing price correction overdue?

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