Here's an example to see how to figure out if your city flunks the affordability test:
In San Jose, the average cost of renting a two-bedroom house or apartment is around $1,300 a month. That's $15,600 a year you'll be spending on rent.
Buying a similar place will cost you easily $500,000 -- 32 times what you're likely to spend on rent a year. "That's an indication that the community has been subject to the speculative price bubble," says Pelletiere. Using the affordability rule, that half-million-dollar San Jose condo is really worth more like $234,000 ($15,600 x 15)."
(From this article.)
Our rent: $1100 x 12 = $13,200 x 15 = $198,000.
Can we find a home in our neighbourhood for that price? I think NOT. Better to keep renting! :)
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