Here’s a very interesting exercise from Razib at Gene Expression. First he created a scatterplot “which shows median home value vs. median household income (log-transformed).” Then he color-coded counties according to whether they were above or below the trend line. Deeper blue means you’re expensive relative to income, while deeper red means the reverse. The home price data is from the bubble years 2005-2007:
There’s a fascinating difference here between the west coast and the northeast. The areas right around New York and Boston got very pricey, but pretty quickly the counties turn red again. On the west coast, by contrast, the blue extends quite far into the hinterlands.
That said, the weather is clearly much better on the west coast than on the east coast, so arguably it makes sense that west coast housing should be more expensive relative to economic opportunities.
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