10. Loan to income ratios will NEVER, EVER get as high as they are now, or in the recent past. Up until about 2006 ratios were over 12:1. A person with $100,000 could assume a mortgage loan of $1.2M. Even with this recent bust things are still coming out to 11:1 on average. No bank in the world will give out a loan at that ratio, and likely won’t in the foreseeable future.
With this in mind, how can CA support such high prices? Aliso Viejo, where I rent an apartment, has a median income of around $90K/year, with homes running close to $900K+. San Clemente, where I’d like to buy is even worse with median incomes at about $110K, and homes running well over a $1M. Who can afford to buy a home in this market? And, conversely, what bank would make that loan without a HUGE downpayment of 10-20%?
Maybe things are looking up for buying a home afterall?
