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Lindley Estes is a business writer for The Free Lance-Star and This blog is on Fredericksburg-area business. Send an e-mail to Lindley Estes.

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Area housing market cheaper than nation as a whole?

The Fredericksburg-area housing market appears to be cheaper than that of the U.S. overall by one measure. The Wall Street Journal ran an article today based on a Zillow Inc. study indicating that nationwide, median home prices are about 3.3 times median incomes. The ratio averaged about 2.9 from 1985 to 2000 and got up to 5.1 during the housing boom in 2005. Housing prices have typically moved in tandem with local incomes, so housing analysts consider the ratio a good gauge for judging whether homes are fairly valued.

I decided to take a look at the numbers locally (Fredericksburg and Caroline, King George, Spotsylvania and Stafford counties). My data sets most likely do not match the Zillow data used in the WSJ article precisely, but they are as close as I could find. I looked at median household income from the U.S. Census Bureau for 2009 (the most recent available) and the year-to-date median sales prices for area homes from Metropolitan Regional Information Systems Inc.

The city of Fredericksburg is the only area locality in which the ratio (4.8) between home sales prices and incomes is higher than the national average (3.3) — but that might not be the best gauge because of the vast discrepancies of the city housing market and workforce.  The ratios in Stafford and Spotsylvania counties (2.6 and 2.5), the area’s biggest localities, are almost exactly the same and are below the current national ratio as well as the historic one from 1985 to 2000. Caroline (2.1) is the most undervalued local market by this measure, and King George (3.2) is in line with national figures. Here are the data:

  Spotsy Stafford Caroline Fred KG
Home sold price $184,900 $225,000 $120,000 $212,000 $222,250
Household income $75,609 $88,179 $57,352 $44,211 $68,846
Ratio 2.5 2.6 2.1 4.8 3.2

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