I cannot believe the average San Diegan can afford the average house. The average house being say in 92116, 550 for an okay home.
Why do we have this market of 20 to 30 offers on foreclosures and 5 to 10 on decent homes?
1. Federal tax credits to first time buyers.
2. 300 billion and counting of quantitative easing (printing money) that is being used to buy mortgage backed securities that are effectively dropping 30year rates by 1% less than they would be otherwise.
3. Federal payoffs to lenders who renegotiate terms.
4. Lendors extending teaser rates for an additional 5 years.
5. State and Federal foreclosure moratoriums.
6. STATE tax credits to buyers.
7. HUD just announced that they will finance up to 125% of home value for underwater “victims”. (you owe 500K but the house is worth 400K, refinancing is now allowed).
Well, off the top of my head 7 interventions is all I could think of but I am sure there are more.
It all becomes clear why a person still needs to pay 550K for an OK house after the real estate crash of the century. Our Government has a firm grip on the balloon and is blowing like it has never blown before.
What happens when it runs out of breath? And it will run out of breath on the day the rest of the world decides it has enough of U.S. green pieces of paper and will no longer accept more paper pulp and ink in exchange of their hard work, labor, sweat, resources and ingenuity.
That day is rapidly approaching and when it does interest rates will skyrocket. How many could even consider buying a 550K house with a 10% mortgage?
