Household Income Affects Market Values
Have you ever wondered what local community traits have a correlation to the value of homes in that community? A long-time reader of the Tallahassee Real Estate Blog submitted a question after I posted "Real Estate History Foretells The Future Of Home Values" relating to this very issue, as "Patrick" wrote:
Hello Joe - Your blog yesterday caused me to reflect on a question that I have had about the TLH market for some time, and that is the correlation (if there is one) between average per capita (or per family) income in a given area vs. the average price of a home. Separate from the whole supply/demand issue, (which I agree will haunt TLH for a long time to come) and separate from the now-defunct speculator market, what effect if does income play in determining prices in a given market/market segment?
I suspect that the answer may differ depending upon the various market segments, but I know of at least one reader who would be interested in your analysis. - Patrick
This is a great question because the more factors that we can isolate that influence housing market changes, the better prepared we can be for future changes in the real estate market. I have already demonstrated a correlation between population size and the number of home sales in a given market area, so now we ponder about a similar relationship between income and home values.
Patrick actually supplies the basis for the answer right in the body of the question regarding household income versus average home prices. He states "separate from the whole supply and demand issue..." which of course we just cannot do. Supply and demand will always be the basis of home value trends in the real estate market. What we need to investigate is how a change in the household income levels in Tallahassee would affect supply and demand.
Without going in to a whole bunch of technical analysis, I think we observe the following when analyzing average income versus home values over time:
- When the economy is robust and wages rise, the demand side in housing rises which pushes up home values.
- When the economy is sluggish and wages flatten or fall, the demand side in housing falls and eventually the supply side becomes heavy, which creates pricing pressure. This pressure either causes appreciation to slow, stop, or actually reverse direction (like in our present market).
So ultimately, income relates to the demand side of the housing market, and we can make educated assumptions on the long-term impact of major changes in income levels in Tallahassee.
What do you think will happen to average household incomes with the Scott Administration is tightening up our State budget?
Joe Wrote The Book On How To Sell A Home Today
WARNING: The Internet & digital marketing systems have changed the way sellers need to market a home for sale. It's not about getting a home sold anymore, it's about getting a home sold and netting the most money from the sale.
To do this, a seller needs to hit the digital market hard in a coordinated effort that alerts ready-buyers (all at the same time) to ensure buyers understand they are competing for the right to buy the home.
While it only takes ONE buyer to sell a home, it takes MULTIPLE BUYERS for the seller to bid the property up to its highest value in today's market. You see our full explanation about how to sell a house here, or you can buy the book and really get into the nuts and bolts of selling a home in the digital age.
Get the book that explains it all, in a manner that is understanding to all, even technology neophytes. It's available on Amazon, a trusted source for consumers.