[quote=ybitz]Aye…why are prices still so high relative to people’s incomes, despite the high foreclosure rates?[/quote]
Depends on where you’re talking about.
So Cal historically has had pretty high ratios – that’s nothing new…it’s simply an area that theres high demand to live in. Rent rates are also high in So Cal – and again, always have been.
I remember back when I got my first solo apartment back in the early 90’s for $600 a month – in the depths of a recession. Same 1 BR in a nice area in any city not on the West Coast (except NY or Boston) would’ve run me $300-$400. I could’ve bought a 3BR house in a lot of places for my rent payment.
In places like the midwest, historically, nearly 70% of households own their own home. In San Diego, the highest ownership figure ever was at about 57% in the late 60’s. Most years it’s down in the 51-55% range. It’s simply a demand factor – all other things being equal,would you rather live in Kansas City, or San Diego? Unfortunately, the flip side of the demand is supply, and so other things are not equal – prices are higher here.
As Rich pointed out in his blog post not too long ago, for San Diego, prices are now relatively in line with their historical averages (not that there won’t be some overshoot to the downside, but that is also normal market behavior in a bubble bust).
San Diego is simply one of those places where the median income will not be able to buy a median house – but that’s nothing new – it’s been that way since WW II (as far back as reliable records go for real estate here).
