We all need at least $250K salary to be able to afford a median-priced home in most coastal areas of California. Problem is less than 5% of the families are paid that well. The discrepancy between 50% of the houses and 5% of the population is huge. That means 45% of the houses are either owned but not used as primary homes by the very rich people or owned by people who can not really afford them. As time goes by, speculators or home owners out stretch themselves will have to give up. The longer they hold the houses, the more money they will lose. We're just running out of high income people to keep the pyramid game going. The day of judgement is coming. Market always punishes excesses. http://www.santacruzsentinel.com/archive/2005/May/10/local/stories/02local.htm "One realtor says the easy money loans are propping up the market. "The continuing high housing prices, said Szychowski, are the result of those low interest rates, combined with low inventory and the loans available." "The interest-only loans have pulled in another huge buying pool,' he said. 'Weâre seeing a lot of dual incomes and a lot of big down payments on the move-up buyers, which is new equity created by this run-up."
lol... It is not my situation. The post was quoted from an article. Thought everyone would see the * " * marks and the link. I have no plans to move, although I too live in California. If I did, it would not be to Texas! Thankfully I own my own home, although I don't think I could afford it today unless it involved interest-only-variable type loans. You know, the kind of loan everyone in California uses these days! It has gotten that stupid out there.
re: We all need at least $250K salary to be able to afford a median-priced home in most coastal areas of California. Problem is less than 5% of the families are paid that well.The discrepancy between 50% of the houses and 5% of the population is huge. That means 45% of the houses are either owned but not used as primary homes by the very rich people or owned by people who can not really afford them. Don't forget those people who have owned a home through the run up in prices and simply apply that equity to the new home that they buy..... The true loser in this situation is the first time home buyer who has no equity in real estate or the new resident that moved from an area of the country that has more reasonable home values.
Yup, and most of those "fortunate" homeowners who had purchased a long time ago had fixed interest rate mortgages. They recently have gotten caught up in "gold fever" and swapped lower dollar fixed debt into a much higher debt (2 or more properties often) variable with a longer term than they had before! In just a few years I think they will be kicking themselves (or worse). I know someone that bought a home for $240k in 1994. Between paying down the loan and his original down payment...he had paid down the loan to something like 180k. He recently sold that house, bought a new car, and bought a new $850k house with a variable loan. I'm sure he has a nice property tax bill to match. Thank god the lenders just got the new bankruptcy laws passed through! I think Wal-Mart will have too many applicants for elderly greeters in the future.
http://news.ft.com/cms/s/f269a8f4-c173-11d9-943f-00000e2511c8.html Real wages declining, but buyers flocking to buy overvalued real estate. Strike up the band, the fat lady is about to sing.
Yahoo News http://news.yahoo.com/s/sddt/majorityofcaliforniansmakelessthanhalftheincomenee Majority of Californians make less than half the income needed to buy a home Thu May 5, 4:31 PM ET LOS ANGELES -- California households are making less than half the income necessary to buy a median-priced home in the first quarter of 2005. Statewide households, with a median household income of $53,540, are $60,380 short of the $113,920 qualifying income needed to purchase a median-priced home at $488,600 in California, according to the California Association of Realtors (C.A.R.) Homebuyer Income Gap Index (HIGI) report for the first quarter of 2005. The association's HIGI is a quarterly analysis of the difference between the median household income and the qualifying income needed to purchase a median-priced, single-family home in the state and for selected regions within the state. The HIGI is calculated with the same assumptions used to generate C.A.R.'s monthly Housing Affordability Index (HAI); a 20 percent down payment and a monthly payment for principal, interest, taxes and insurance (PITI) that is no more than 30 percent of a household's income. For Southern California, the median-priced home was $477,660, which required a qualifying income of $111,370 to make the monthly PITI payment of $2,780. However, the median household income for Southern California was $52,050, leaving an income shortfall of $59,320. "These numbers are particularly troubling for would-be first-time homebuyers, who often are locked out of homeownership because of the lack of affordable homes for sale," said C.A.R. President Jim Hamilton. "While home sales statewide continue to surge, the California real estate market is being dominated by repeat homebuyers, who account for three out of four home purchases in the state." The HIGI for California increased 44.9 percent during the first quarter of 2005 compared to the first quarter of 2004, when the gap stood at $41,660, the median household income was $52,320, and qualifying income needed to purchase a median-priced home at $407,710 was $93,980. "At $100,000, the household incomes of repeat homebuyers are much greater than the population as a whole," Hamilton said. "Repeat buyers also are able to take advantage of equity gains in their current homes, with many making a down payment on their new home that's frequently greater than 20 percent. "For those repeat buyers, the income gap can fall as low as $23,320. Even though repeat buyers fare better than first-timers, that's little consolation to Californians spending a significant portion of their income servicing their monthly mortgage," Hamilton added. According to the report, potential homebuyers in the Central Valley, with a median household income of $41,040, had the smallest income gap at $32,660, and needed a qualifying income of $73,700 to purchase a median-priced home at $316,100. The San Francisco Bay area had the highest gap in the state at $92,930, where potential homebuyers had a median household income of $67,770 but needed qualifying income of $160,700 to purchase a median-priced home at $689,240.
leaving alhambra? aren't you going to miss all the good chinese food? i feel your pain. my friend graduating this year will earn about 60k/year if he choses to go FT at his current PT job. at that rate, he will not be able to afford his own place around this area. it is insane to pay 450k for a piece of shit house in this area. if young professionals can't afford these houses, who's going to hold up the market?
Locals upgrading, moving to another part of town etc. For example my folks sold their home for 1.3 M having paid 49,500 bucks in 1974. It allowed them to get into another home in town (also inflated) and they don't seem to care if the market tanks and they end up under water 'cause they only paid 49,500 to begin with. I'm about an hour from downtown L.A. and have seen over 300% appreciation in 4-years. Its crazy and there is definitely a temptation to cash in. My problem is that I have a 15-year 4.5% fixed so I just want to stay put. My neighboors have all taken second mortgages and have motor homes and boats parked all over their property. Just crazy..
How about this for a bank??? http://www.coastcapitalsavings.com/Personal/Borrowing/Mortgages "No Worry Mortgages Coast Capital Savings No Worry Mortgages⢠now make it easier than ever to become a homeowner. Weâve relaxed our lending guidelines to the point where just about anyone qualifies. There are all kinds of tiny credit blemishes, like a forgotten parking ticket that can make you hideously unattractive to other lending institutions. But weâre not that picky. Even from here we can say you look good to us. Honestly, we barely say no to anyone."