patientrenter, I think what was being said about incomes in line with prices was only related to towns listed in the article, not the country as a whole. Temecula Valley is now in line with income and the two largest towns are #1 and #3 on forbes list for places with hot sales. Temecula’s median income is 67k, a condo will run you 150k, a modest 3/2 sfr is well under 200k, and mcmansions are under 300k. The median house is 3x the median income, that is equilibrium, that is the fundamental that needs to be in every town. That’s it, mystery solved, call washington, tell them we figured out the foreclosure crisis, this is a thye model. Lower prices to be fundamentally in line with income for that area and voila! Problem solved. The contracters and retail places get business because people fix up their repos and the rest of retail enjoys the disposable income freed up by a low mortgage. The rest of So Cal’s economic problems can be solved by following the canary in a coal mine, stop the bailout and begin the kick out, forclose on people, you are doing them a favor. Anectdotaly, I had a chance to meet the former owners of my pad, they were a classic example, bought a 650k pad with no down on 100k income, were strapped when the resets came and lost it. Somehow they just managed to buy in a town 20 miles north which is cheaper, got a smaller place and paid 200k, it’s what they should have done in the first place but now they can afford it. They could have been used by the media as a poor fb family being thrown out, but the follow up story is they are happier now that they have managable finances and extra to pay off some debt they incurred trying to save their original house.
