esmith,
I never said MM wasnt a first time owner market, while CV is a move up market. What I ment was the people who the bank wants to lend to dont want to live in this area generally. Good people live here, I hope to own my first home here someday, but more and more the traditional people who bought here are being squeezed out by higher costs and lower than normal pay raises. That is gonna squeeze the pool of potential buyers, lowering demand.
Second off. Lets explore affordability using your numbers. You say in 2001 median prices were 240000, and median wages $47000. That gives us a ratio of 5.1 years of income to cost of house (median income to median house). In 2007, median wages are 59000. You state that housing should be ~400000. That gives us a ratio of 6.8. That is an extra 1.7 years of wages or roughly a 33% increase. When factoring in increased costs of living, where are people in their late 20’s to early 30’s with good incomes but short (ie <10 year) credit histories and the resulting higher interest rates gonna get that increased buying power? Using the 5.1 income/cost ratio, median prices should be $300000. This is a roughly 10%-20% premium to rents, and low and behold down payments are usually in that range.
As for down payments, ofcourse people use to do it. They always have, always will. I have been saving money since I was 14. I have my down payment. Could have put 20% back in 2005 at the peak. I got lucky, most are not as lucky as I am. What I ment by that is it will affect demand. I dont care how much you want a house, if the bank wont lend and you make too much for some of these questionable government sponsored down payment programs, you cant buy. Prices will have to reflect this.
