If You Bought a House in August, You Won



"Now is a great time to buy a house," a Realtor said every single day since the dawn of Realtors. And until The Great American Housing Bubble, they were usually right. Houses were good investments ... until Wall Street started using them as tokens in their rigged casino games.

The housing market has been out of whack for roughly a decade now (see chart below), but the latest numbers from the Humboldt Association of Realtors suggest that prices are settling back down to historical norms. And so, like broken clocks that waited patiently for the return of the hour hand, Realtors may once again be correct: Now just might be a great time to buy a house.

Yesterday, the Humboldt Association of Realtors released its countywide stats for August home sales. Here's where we stand:


NCJ graph based on figures from the Humboldt Association of Realtors

The median price of homes sold in Humboldt County was $220,390, which is where they seem to have plateaued. (The median has been within $20,000 of that mark for almost a year now.) Combine that value with a median household income of $45,409, plus a record-low mortgage rate of just 3.7 percent, and you get the most affordable monthly house payments in more than a decade.

Let's get specific: Say you purchased this hypothetical median-priced home in August, with the standard 20 percent down. Your monthly payment, including principal, interest, taxes and insurance, would be $1,048.45. And say that, by some remarkable coincidence, your household also happened to earn the county's median household income. Your mortgage payments would eat up 28 percent of your income.

When's the last time house payments took such a small bite of local incomes? Go ahead and guess; we'll wait.

It was April 1999 -- 13 years and four months ago. Between then and now, the local bubble peaked (in March 2006) with median-priced home selling for $349,500. The monthly payment on that home would have consumed more than two-thirds (67 percent) of the county's median income.

If you bought a house back then, condolences. But the rest of us can be grateful that the long free fall has brought prices back down to earth.

In case you're curious, here are the median August home prices for Eureka, Arcata, Fortuna and McKinleyville. And just so you can revel at how far out of whack we got, we've also included the high-water mark for each town:

  • Eureka -- $176,100 (high -- $345,000 in Feb. 2006)
  • Arcata -- $235,000 (high -- $608,000 in April 2006)
  • Fortuna -- $201,500 (high -- $465,000 in Oct. 2007)
  • McKinleyville -- $230,000 (high -- $418,000 in April 2007)

It should be noted that individual markets have pretty small sample sizes from month to month, so the highs can be skewed dramatically by the sale of one or two very expensive homes. Still, we're nowhere near these levels anymore.

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