Is 6% truly a “normal appreciation” rate? Aren’t most of these guys on this thread going into detail about how housing tracks long-term to inflation? Come on!
Bottom line, when you have a community with a median household income of $62k and the median house is selling for $500k+, something is seriously wrong. These median wage earners are still buying homes! They are focusing on monthly payment (an artificial introductory one at that…) which is why 1 out of every 3 homes is purchased with a Neg-am loans during the last year. I do not recall what the remaining 2/3 of buyers are using in SD, but I would bet that a majority of those loans are ARMs w/ below market intro rates.
The local SD bank I recently worked for had 80% of their portfolio in gimmick loans (Neg-am, teaser Arms, I/O). Why? Because they can! The regulators are a joke. The cheap $$ has allowed many, many of these around-the-median earners to get into houses they can not afford.
If the lending regs were tighter, these people could not get loans for $500k+. If these people could only get loans for what they could truly afford, they would not be able to buy an average tract home for half a freaking million dollars! If most people could not buy the median home at $500k, the price would never have gotten to that level in the first place.
Yes. It is not entirely the banks fault, but without the cheap money, I can almost guarantee this ridiculous bubble would not have gotten so large.
