I keep hearing how home prices are insane these days…in places like Chicago and New Jersey, new homes cost more than $300,000 for a 2200 sq. ft. place. Yet the median income in these cities is like $39,000. So how do they do it? Do people just live in unaffordable housing?
Well, your question is pretty loaded. First poor people can't afford houses, so you should take them out of the median income, which would raise it to about $50-60k or so. Secondly not all people go and buy new homes. There are tons of little teeny houses which suit some, e.g. single person doesn't necessarily need a 5 bedroom house. So you buy one house build up equity then sell it and buy a bigger more expensive house.
Then you come to the fact that the reason prices are that high is because of the demand, and that is because ppl are getting mortgages with very very good percentages. So pretty much all one has to do is save up enough for a downpayment and the regular monthly pmts is only slightly higher than what you're paying in rent. But with the pmts you're not only building equity but the interest payment is tax deductible so you get a nice little check come next April 15.
Just my 2 cents worth.