Most Expensive Real Estate Markets

In the first quarter of 2001, 42.3 percent of homes sold in Los Angeles were available to the median earning household. But in the first quarter of 2007, only 3 percent of homes sold there were affordable to those households earning the median income. This is based on data from the National Association of Home Builders (NAHB) and Wells Fargo that assumes a 10 percent down payment, a 6.1 percent mortgage, and tax and insurance costs calculated by the Federal Housing Finance Board.

… Ten years ago, San Francisco was the only city above a 4.5. Today, there are 13. The more out of whack prices are with income, the more buyers are forced to rely on credit to make up for the market’s unaffordability. That could mean trouble down the line. Look no further than the current tightening of credit standards; it’s expected to create problems for markets trying to recover from a slump.

Pricey Properties: The Nation’s Most Expensive Housing Markets