Anyone wonder why there was a housing bubble? Take Plymouth, MN for example. It has been named one of the best smaller cities in America to live. It’s a great place. It’s not California, and it’s not Vegas especially when it comes to home prices. But check this out….according to the site City-Data, the median income for a resident in Plymouth rose by $4,740 from 2000 to 2009. The earnings went from $77,008 to $81,748. That’s good for 6% growth over 9 years.
However, let’s look at the median value of homes. This includes single family, town homes and condos. Median prices went from $191,100 in 2000 to $328,300 by 2009. That’s an increase of $137,200 or 72%.
Think of it another way…$4,740 more in income was able to buy $137,200 more in housing. That’s 29x leverage. Phenomenal. And of course, not sustainable which is why we’ve seen the home price declines in the past several years.
- Plymouth, MN Median Home Prices Declined by Only 2.3% Year Over Year Through August 2011 (johnmurphyreports.com)
- Plymouth MN New Construction Report (johnmurphyreports.com)
- Top Residential Transactions Plymouth MN – Finance and Commerce (johnmurphyreports.com)