TOP FIVE OVERPRICED CITIES IN THE U.S.

13 cities that make up the Adkins 60-City Home Price Index were classified as overpriced for the quarter.

It is not possible to justify the home price level for the top five overpriced cities by reducing the mortgage loan

interest rate from 3.35% to 0.0%.

In order to classify the homes in the top five overpriced cities as underpriced, it would need to be deemed

prudent by prospective home buyers to spend more than the justified percentage of household income amount.

In order to justify the median home price level for each city, the median required household income level would

need to increase to a level within the respective range of $85,845 and $208,521.

Based on the median household income level, the quarter ending national average mortgage loan interest rate,

and the assumption that no more than 28% of pre-tax household income should be spent in order to repay the

principal and interest costs of a mortgage loan, the justified home price level for the top five overpriced cities

fell within the respective range of $296,425 and $445,580.

Adkins 60-

City Home

Price Index

Median

Household

Income

Level

Median

Home Price

Level

Justified

Mortgage

Loan

Interest

Rate

Justified

Percentage

of

Household

Income

Required

Median

Household

Income

Level

Justified

Home Price

Level

San Francisco $84,160 $1,104,000 None 70% $208,521 $445,580

New York City $58,878 $586,400 None 53% $110,758 $311,726

San Diego $63,400 $540,500 None 46% $102,088 $335,667

Seattle $71,273 $592,200 None 44% $111,853 $377,351

Los Angeles $55,988 $454,500 None 43% $85,845 $296,425

Adkins Capital Management, LLC. 2016 Q3 - Residential Real Estate Analysis

ADKINS CAPITAL MANAGEMENT