Sunday, November 21, 2010
Unified Equitable Home Price Evaluator
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COPYRIGHT: November 21, 2010
OWNER: Thomas Blankenhorn
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The equitable home price is based on functions of the user entered values such that a modest home would be affordable for a single wage-earner at the local median income. The functions happen to line up to produce affordability values of 2.5 and 3, respectively, for a rural and urban home of 1700 square feet, 1/8 acre, 25 years old, 2 bathrooms, flat-land situated, and modest distance from a natural water source, specifically 15 miles from a large river.
The affordability Index generally indicates fair value when in the range of 2.5 to 3.
A ratio under 2.5 would be either a very good value and/or be subject to some unfavorable conditions. A ratio over 3 would be not so good of value in pure monetary terms but if favorable conditions are associated with it, the overall value may be reasonable.
It has been suggested that basis of a zip code would be useful and I agree it could in part, but in identifying those features of a particular area is more objective and does not feed into whim as if, for example, holding the view that living in Los Angeles, California has to be 5 times higher than living in Austin, Texas.
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