I made over $80k when I lived in SD last year, and the middle of the road home in my hood was about $750k. Almost 10x my yearly wage! That just pisses me off.
This is happening because people can buy with less than 20% down. What happened is that, through deregulation of the banking industry and securitization of home loans, the barrier to market entry was lowered significantly, drastically increasing the number of participants. Supply held relatively constant, prices have nowhere to go but up. 20% down should be the rule of the land but it’s probably never coming back. Instead we will get this weird socialized debt system, where those willing to go most into debt are subsidized by those who save and live within their means. Like the economy of the old Soviet Union, it is an ideologically-based system — those with the most faith in the glory of the “free” market will borrow the most and overextend themselves because they’re sure everything will work out in the end. When it doesn’t, those of us who are ideologically unfaithful (i.e., save our money and live within our means) get punished with higher taxes for bailouts and deflation of our money through currency debasement . In the end of course, the market is completely rigged and anything but “free”, but those faithful to the prevailing ideology (borrow and spend as much as possible) are rewarded with big fancy custom homes and new BMWs while the rest of us live in apartments and drive 10-year-old Hondas.
