“During the 1990s and early 2000s, it took 19% of average monthly income to service a conforming mortgage on the average home purchased. By 2005 and 2006, it was absorbing 25% of monthly income. For first time buyers, it went from 29% of income to 37%. That just proved to be too much.
Prices got so high that people who intended to actually live in the houses they purchased (as opposed to speculators) stopped buying. This caused the bubble to burst.
Since then, house prices have fallen 10%-15%, while incomes have kept growing….”
In San Diego…there are neighborhoods where the homes have lost 40% – or more of their previous bubble value. The comments about income absorption also seem inaccurate. People were buying homes 10X their income…also…from what I have read..incomes are not “growing” and inflation is going up. It’s really pretty useless information.
