There are a large number of articles in the press on the topic of values of real estate throughout the nation increasing and rapidly. Those articles show that affordability of homes has declined since prices have gone up while incomes have not increased (at least not at the rate of real estate values increase).

In other words, increases in personal income have not kept up with the increase in values. Articles in the Wall Street Journal and the Realtor Magazine published by the National Association of Realtors, report that selective areas are becoming unaffordable. Top of the list is San Francisco which has a median income of $78,355 and with a mortgage to income ratio of 72%. In other words only 28% of the potential buyers can afford a house in that area.

More interesting to me is that within certain areas, the values of homes in selective neighborhoods have gone up while other neighborhoods see little to no increase in value.

Let’s look at the state of New York and how its ratio has increased in values in selective towns. The State of New York conducts yearly studies of the rate of increase and or decrease in local real estate markets.

Top of my list is the City of Mount Vernon which has seen a state report average increase in values of 14.50% from 2014 to 2015. What can account for huge increases in values? My research has shown that the southern part of the City has had modest increases in values while the northern part of the town has had huge increases in sales prices. The southern part of the town has, what I estimate to be an average sales price of $300,000, but if you go to the northern part of the town the average sales price is closer to $650,000. Thus, the lower price neighborhoods are not seeing increase in price anywhere near to the increases in prices in the higher priced neighborhood. Real estate logic would suggest the opposite with the most affordable being in highest demand.

Now let’s look at the Town of Eastchester which is also located in the County of Westchester. State of New York data suggests that values here have increased at 12.50% again from 2014 to 2015. My interview with a town official suggested that there was a general increase in values but most of the increase was in the Village of Bronxville, the highest priced neighborhood in the Town. That would suggest that the less prestige neighborhoods have not had such large increase in values.

Now let’s look at the Town of Ramapo and in particular the Ramapo Central School District. I have noticed a decline in value of homes in that area that were or are worth around one million. I noticed that homes that were once selling for over one million are now selling for around $800,000 – a 20% drop in value.

What I notice is that generally the highest priced homes in the area have had the most rapid increase in values. But that was not always true in all areas. The point is that it is true that generally values are increasing and generally those increases are in the highest priced areas. But even this rule is not universal and there are high priced neighborhoods that have seen serious downward pressures. The rule is, there is no rule in a market in which there is rapidly increasing values in some areas and declining values in others.