50% off is the regular price.

[patientrenter]

Sounds like there’s a lot of emotion on this issue, so I’ll just drop in on this thread and drop out.

The notion that 50% off peak prices is a baseline, not a nadir, isn’t so far-fetched. I always scratch my head when I see fellow Piggs say that they expect the market to bottom at the price level that prevailed some time between 2000 and 2003. Sure, that could happen, but real estate is very cyclical, and the bottom of the last cycle was not then – it was 1996 or so.

In my own attempts to ballpark what home prices in So Cal might do as they reach bottom in the next few years, I:

1. Start with prices as of the bottom of the last cycle – 1996

2. Add some inflation. You can argue over the amount, but it’s not worth refining too much, so I just add about 40-60%, depending on my mood.

3. Subtract some for the extra severity of this downturn. This is a pure guess. Your guess is as good as mine (unless it’s different!)

4. Add some for the massive government efforts to maintain high home prices in this latest downturn. Who knows?

Because the last 2 are pure guesses, I tend to not do any explicit calculation for them, and just assume that in some hard-hit areas, prices will get in the neighborhood of the 1996 inflation-adjusted level and maybe lower, and in some sheltered areas, prices could stay higher by a significant %.

How does all that relate to the discussion about 50% off peak? Given that home prices at their peak were perhaps 4-6 times what they were in 1996, I see 50% off peak as being near the high end of my expected price range at the bottom this time.

[Rt.66]

[quote=temeculaguy]The misleading part about median income to median house it it fails to chop off the bottom 1/3 of earners who will not be/should not be buyers. S.D. is historically in the 4-7x median to median with some sub 4 years and the most recent bubble hitting 11. Apartments dwellers are included in the median income but the apartments themselves are not included in the median sales price because they are not sold individually. So you are including players into the statistical game on one side of the formula yet they aren’t on the other side. If nothing was rented and all apartments were individually owned as condos the numbers would be true, the current formula is flawed.

S.D. had a worse median to median ratio than detroit and I’ll bet Hawaii is worse than S.D., history of a particular market matter, not national or rustbelt numbers.

In fact I ran Lahaina in Maui, 61k median income, 1.8 million median home price

http://realestate.yahoo.com/Hawaii/Lahaina/neighborhoods;_ylt=AgdtNwgl5yQZNgk2QDrAHvKWxol4?p=lahaina%2C+hawaii&redir=1

If rt.66 is right and we get to buy a pad on maui for 2.5x median income, I’ll pack my shit right now.

I actually like Southwest Maui better (Kihei, Wailea, Makena) and the median there was only 54k, the good news is that houses were much cheaper, 850k median, so when I can get one for 125k, I wont even bother packing, I’ll get new stuff once I get there.

http://realestate.yahoo.com/Hawaii/Kihei/neighborhoods;_ylt=AgdtNwgl5yQZNgk2QDrAHvKWxol4?p=Kihei%2C+HI&search=Search&redir=1%5B/quote%5D

So a proven 100 year old housing affordability ratio (price x average wages) is no longer accurate because we have a new dynamic called renters and low earners to contend with?

If you chop off the bottom 1/3 won’t you logically chop off the top 1/3 as well? SD especially has lots of millionaires and even billionaires that throw the average way up.

Millionaires and billionaires are not players in the housing reality we live in but their houses and incomes are included in ratios.

Those apartment dwellers and renters are future first time buyers, a group housing cannot survive without. You can’t move up if others below are not moving up. So they most certainly are to be considered in housing affordability.

So Cal has gotten around historical affordability ratios with housing bubbles. No more though.
2.5-3 times earnings is a historically proven AFFORDABILITY gage. Meaning people can actually make their payments at those ratios.

SD average wage of $61k is probably high and even if not; wage deflation will probably bring it into the $50ks. Even 3x earnings at $55k aver. earnings is $165k for SD housing. So the HIGH end of affordability will probably be $165k.

Unbelievable? In 2006 how people would have thought you could buy a 2500 sq’ house in Temecula for $220k in 2009? Not many, and most would have thought the idea completely absurd. That rushed cut in prices was just the quick fall to “regular” prices. Now the discounts begin.

[Rt.66]

[quote=temeculaguy]The misleading part about median income to median house it it fails to chop off the bottom 1/3 of earners who will not be/should not be buyers. S.D. is historically in the 4-7x median to median with some sub 4 years and the most recent bubble hitting 11. Apartments dwellers are included in the median income but the apartments themselves are not included in the median sales price because they are not sold individually. So you are including players into the statistical game on one side of the formula yet they aren’t on the other side. If nothing was rented and all apartments were individually owned as condos the numbers would be true, the current formula is flawed.

S.D. had a worse median to median ratio than detroit and I’ll bet Hawaii is worse than S.D., history of a particular market matter, not national or rustbelt numbers.

In fact I ran Lahaina in Maui, 61k median income, 1.8 million median home price

http://realestate.yahoo.com/Hawaii/Lahaina/neighborhoods;_ylt=AgdtNwgl5yQZNgk2QDrAHvKWxol4?p=lahaina%2C+hawaii&redir=1

If rt.66 is right and we get to buy a pad on maui for 2.5x median income, I’ll pack my shit right now.

I actually like Southwest Maui better (Kihei, Wailea, Makena) and the median there was only 54k, the good news is that houses were much cheaper, 850k median, so when I can get one for 125k, I wont even bother packing, I’ll get new stuff once I get there.

http://realestate.yahoo.com/Hawaii/Kihei/neighborhoods;_ylt=AgdtNwgl5yQZNgk2QDrAHvKWxol4?p=Kihei%2C+HI&search=Search&redir=1%5B/quote%5D

So a proven 100 year old housing affordability ratio (price x average wages) is no longer accurate because we have a new dynamic called renters and low earners to contend with?

If you chop off the bottom 1/3 won’t you logically chop off the top 1/3 as well? SD especially has lots of millionaires and even billionaires that throw the average way up.

Millionaires and billionaires are not players in the housing reality we live in but their houses and incomes are included in ratios.

Those apartment dwellers and renters are future first time buyers, a group housing cannot survive without. You can’t move up if others below are not moving up. So they most certainly are to be considered in housing affordability.

So Cal has gotten around historical affordability ratios with housing bubbles. No more though.
2.5-3 times earnings is a historically proven AFFORDABILITY gage. Meaning people can actually make their payments at those ratios.

SD average wage of $61k is probably high and even if not; wage deflation will probably bring it into the $50ks. Even 3x earnings at $55k aver. earnings is $165k for SD housing. So the HIGH end of affordability will probably be $165k.

Unbelievable? In 2006 how people would have thought you could buy a 2500 sq’ house in Temecula for $220k in 2009? Not many, and most would have thought the idea completely absurd. That rushed cut in prices was just the quick fall to “regular” prices. Now the discounts begin.

[Rt.66]

[quote=temeculaguy]The misleading part about median income to median house it it fails to chop off the bottom 1/3 of earners who will not be/should not be buyers. S.D. is historically in the 4-7x median to median with some sub 4 years and the most recent bubble hitting 11. Apartments dwellers are included in the median income but the apartments themselves are not included in the median sales price because they are not sold individually. So you are including players into the statistical game on one side of the formula yet they aren’t on the other side. If nothing was rented and all apartments were individually owned as condos the numbers would be true, the current formula is flawed.

S.D. had a worse median to median ratio than detroit and I’ll bet Hawaii is worse than S.D., history of a particular market matter, not national or rustbelt numbers.

In fact I ran Lahaina in Maui, 61k median income, 1.8 million median home price

http://realestate.yahoo.com/Hawaii/Lahaina/neighborhoods;_ylt=AgdtNwgl5yQZNgk2QDrAHvKWxol4?p=lahaina%2C+hawaii&redir=1

If rt.66 is right and we get to buy a pad on maui for 2.5x median income, I’ll pack my shit right now.

I actually like Southwest Maui better (Kihei, Wailea, Makena) and the median there was only 54k, the good news is that houses were much cheaper, 850k median, so when I can get one for 125k, I wont even bother packing, I’ll get new stuff once I get there.

http://realestate.yahoo.com/Hawaii/Kihei/neighborhoods;_ylt=AgdtNwgl5yQZNgk2QDrAHvKWxol4?p=Kihei%2C+HI&search=Search&redir=1%5B/quote%5D

So a proven 100 year old housing affordability ratio (price x average wages) is no longer accurate because we have a new dynamic called renters and low earners to contend with?

If you chop off the bottom 1/3 won’t you logically chop off the top 1/3 as well? SD especially has lots of millionaires and even billionaires that throw the average way up.

Millionaires and billionaires are not players in the housing reality we live in but their houses and incomes are included in ratios.

Those apartment dwellers and renters are future first time buyers, a group housing cannot survive without. You can’t move up if others below are not moving up. So they most certainly are to be considered in housing affordability.

So Cal has gotten around historical affordability ratios with housing bubbles. No more though.
2.5-3 times earnings is a historically proven AFFORDABILITY gage. Meaning people can actually make their payments at those ratios.

SD average wage of $61k is probably high and even if not; wage deflation will probably bring it into the $50ks. Even 3x earnings at $55k aver. earnings is $165k for SD housing. So the HIGH end of affordability will probably be $165k.

Unbelievable? In 2006 how people would have thought you could buy a 2500 sq’ house in Temecula for $220k in 2009? Not many, and most would have thought the idea completely absurd. That rushed cut in prices was just the quick fall to “regular” prices. Now the discounts begin.

[Rt.66]

[quote=temeculaguy]The misleading part about median income to median house it it fails to chop off the bottom 1/3 of earners who will not be/should not be buyers. S.D. is historically in the 4-7x median to median with some sub 4 years and the most recent bubble hitting 11. Apartments dwellers are included in the median income but the apartments themselves are not included in the median sales price because they are not sold individually. So you are including players into the statistical game on one side of the formula yet they aren’t on the other side. If nothing was rented and all apartments were individually owned as condos the numbers would be true, the current formula is flawed.

S.D. had a worse median to median ratio than detroit and I’ll bet Hawaii is worse than S.D., history of a particular market matter, not national or rustbelt numbers.

In fact I ran Lahaina in Maui, 61k median income, 1.8 million median home price

http://realestate.yahoo.com/Hawaii/Lahaina/neighborhoods;_ylt=AgdtNwgl5yQZNgk2QDrAHvKWxol4?p=lahaina%2C+hawaii&redir=1

If rt.66 is right and we get to buy a pad on maui for 2.5x median income, I’ll pack my shit right now.

I actually like Southwest Maui better (Kihei, Wailea, Makena) and the median there was only 54k, the good news is that houses were much cheaper, 850k median, so when I can get one for 125k, I wont even bother packing, I’ll get new stuff once I get there.

http://realestate.yahoo.com/Hawaii/Kihei/neighborhoods;_ylt=AgdtNwgl5yQZNgk2QDrAHvKWxol4?p=Kihei%2C+HI&search=Search&redir=1%5B/quote%5D

So a proven 100 year old housing affordability ratio (price x average wages) is no longer accurate because we have a new dynamic called renters and low earners to contend with?

If you chop off the bottom 1/3 won’t you logically chop off the top 1/3 as well? SD especially has lots of millionaires and even billionaires that throw the average way up.

Millionaires and billionaires are not players in the housing reality we live in but their houses and incomes are included in ratios.

Those apartment dwellers and renters are future first time buyers, a group housing cannot survive without. You can’t move up if others below are not moving up. So they most certainly are to be considered in housing affordability.

So Cal has gotten around historical affordability ratios with housing bubbles. No more though.
2.5-3 times earnings is a historically proven AFFORDABILITY gage. Meaning people can actually make their payments at those ratios.

SD average wage of $61k is probably high and even if not; wage deflation will probably bring it into the $50ks. Even 3x earnings at $55k aver. earnings is $165k for SD housing. So the HIGH end of affordability will probably be $165k.

Unbelievable? In 2006 how people would have thought you could buy a 2500 sq’ house in Temecula for $220k in 2009? Not many, and most would have thought the idea completely absurd. That rushed cut in prices was just the quick fall to “regular” prices. Now the discounts begin.

[Rt.66]

[quote=temeculaguy]The misleading part about median income to median house it it fails to chop off the bottom 1/3 of earners who will not be/should not be buyers. S.D. is historically in the 4-7x median to median with some sub 4 years and the most recent bubble hitting 11. Apartments dwellers are included in the median income but the apartments themselves are not included in the median sales price because they are not sold individually. So you are including players into the statistical game on one side of the formula yet they aren’t on the other side. If nothing was rented and all apartments were individually owned as condos the numbers would be true, the current formula is flawed.

S.D. had a worse median to median ratio than detroit and I’ll bet Hawaii is worse than S.D., history of a particular market matter, not national or rustbelt numbers.

In fact I ran Lahaina in Maui, 61k median income, 1.8 million median home price

http://realestate.yahoo.com/Hawaii/Lahaina/neighborhoods;_ylt=AgdtNwgl5yQZNgk2QDrAHvKWxol4?p=lahaina%2C+hawaii&redir=1

If rt.66 is right and we get to buy a pad on maui for 2.5x median income, I’ll pack my shit right now.

I actually like Southwest Maui better (Kihei, Wailea, Makena) and the median there was only 54k, the good news is that houses were much cheaper, 850k median, so when I can get one for 125k, I wont even bother packing, I’ll get new stuff once I get there.

http://realestate.yahoo.com/Hawaii/Kihei/neighborhoods;_ylt=AgdtNwgl5yQZNgk2QDrAHvKWxol4?p=Kihei%2C+HI&search=Search&redir=1%5B/quote%5D

So a proven 100 year old housing affordability ratio (price x average wages) is no longer accurate because we have a new dynamic called renters and low earners to contend with?

If you chop off the bottom 1/3 won’t you logically chop off the top 1/3 as well? SD especially has lots of millionaires and even billionaires that throw the average way up.

Millionaires and billionaires are not players in the housing reality we live in but their houses and incomes are included in ratios.

Those apartment dwellers and renters are future first time buyers, a group housing cannot survive without. You can’t move up if others below are not moving up. So they most certainly are to be considered in housing affordability.

So Cal has gotten around historical affordability ratios with housing bubbles. No more though.
2.5-3 times earnings is a historically proven AFFORDABILITY gage. Meaning people can actually make their payments at those ratios.

SD average wage of $61k is probably high and even if not; wage deflation will probably bring it into the $50ks. Even 3x earnings at $55k aver. earnings is $165k for SD housing. So the HIGH end of affordability will probably be $165k.

Unbelievable? In 2006 how people would have thought you could buy a 2500 sq’ house in Temecula for $220k in 2009? Not many, and most would have thought the idea completely absurd. That rushed cut in prices was just the quick fall to “regular” prices. Now the discounts begin.

[Nor-LA-SD-guy]

[quote=Rt.66][quote=temeculaguy]The misleading part about median income to median house it it fails to chop off the bottom 1/3 of earners who will not be/should not be buyers. S.D. is historically in the 4-7x median to median with some sub 4 years and the most recent bubble hitting 11. Apartments dwellers are included in the median income but the apartments themselves are not included in the median sales price because they are not sold individually. So you are including players into the statistical game on one side of the formula yet they aren’t on the other side. If nothing was rented and all apartments were individually owned as condos the numbers would be true, the current formula is flawed.

S.D. had a worse median to median ratio than detroit and I’ll bet Hawaii is worse than S.D., history of a particular market matter, not national or rustbelt numbers.

In fact I ran Lahaina in Maui, 61k median income, 1.8 million median home price

http://realestate.yahoo.com/Hawaii/Lahaina/neighborhoods;_ylt=AgdtNwgl5yQZNgk2QDrAHvKWxol4?p=lahaina%2C+hawaii&redir=1

If rt.66 is right and we get to buy a pad on maui for 2.5x median income, I’ll pack my shit right now.

I actually like Southwest Maui better (Kihei, Wailea, Makena) and the median there was only 54k, the good news is that houses were much cheaper, 850k median, so when I can get one for 125k, I wont even bother packing, I’ll get new stuff once I get there.

http://realestate.yahoo.com/Hawaii/Kihei/neighborhoods;_ylt=AgdtNwgl5yQZNgk2QDrAHvKWxol4?p=Kihei%2C+HI&search=Search&redir=1%5B/quote%5D

So a proven 100 year old housing affordability ratio (price x average wages) is no longer accurate because we have a new dynamic called renters and low earners to contend with?

If you chop off the bottom 1/3 won’t you logically chop off the top 1/3 as well? SD especially has lots of millionaires and even billionaires that throw the average way up.

Millionaires and billionaires are not players in the housing reality we live in but their houses and incomes are included in ratios.

Those apartment dwellers and renters are future first time buyers, a group housing cannot survive without. You can’t move up if others below are not moving up. So they most certainly are to be considered in housing affordability.

So Cal has gotten around historical affordability ratios with housing bubbles. No more though.
2.5-3 times earnings is a historically proven AFFORDABILITY gage. Meaning people can actually make their payments at those ratios.

SD average wage of $61k is probably high and even if not; wage deflation will probably bring it into the $50ks. Even 3x earnings at $55k aver. earnings is $165k for SD housing. So the HIGH end of affordability will probably be $165k.

Unbelievable? In 2006 how people would have thought you could buy a 2500 sq’ house in Temecula for $220k in 2009? Not many, and most would have thought the idea completely absurd. That rushed cut in prices was just the quick fall to “regular” prices. Now the discounts begin.

[/quote]

I have to go with TG on this, only during economic downturns does price/earning come in to play strongly in SoCal, once the economy is moving there is far greater discrepancy between the bottom and middle to top earners and then you have the self employed.

There is a sort of double whammy paradise & economic opportunity tax in SoCal.

[Nor-LA-SD-guy]

[quote=Rt.66][quote=temeculaguy]The misleading part about median income to median house it it fails to chop off the bottom 1/3 of earners who will not be/should not be buyers. S.D. is historically in the 4-7x median to median with some sub 4 years and the most recent bubble hitting 11. Apartments dwellers are included in the median income but the apartments themselves are not included in the median sales price because they are not sold individually. So you are including players into the statistical game on one side of the formula yet they aren’t on the other side. If nothing was rented and all apartments were individually owned as condos the numbers would be true, the current formula is flawed.

S.D. had a worse median to median ratio than detroit and I’ll bet Hawaii is worse than S.D., history of a particular market matter, not national or rustbelt numbers.

In fact I ran Lahaina in Maui, 61k median income, 1.8 million median home price

http://realestate.yahoo.com/Hawaii/Lahaina/neighborhoods;_ylt=AgdtNwgl5yQZNgk2QDrAHvKWxol4?p=lahaina%2C+hawaii&redir=1

If rt.66 is right and we get to buy a pad on maui for 2.5x median income, I’ll pack my shit right now.

I actually like Southwest Maui better (Kihei, Wailea, Makena) and the median there was only 54k, the good news is that houses were much cheaper, 850k median, so when I can get one for 125k, I wont even bother packing, I’ll get new stuff once I get there.

http://realestate.yahoo.com/Hawaii/Kihei/neighborhoods;_ylt=AgdtNwgl5yQZNgk2QDrAHvKWxol4?p=Kihei%2C+HI&search=Search&redir=1%5B/quote%5D

So a proven 100 year old housing affordability ratio (price x average wages) is no longer accurate because we have a new dynamic called renters and low earners to contend with?

If you chop off the bottom 1/3 won’t you logically chop off the top 1/3 as well? SD especially has lots of millionaires and even billionaires that throw the average way up.

Millionaires and billionaires are not players in the housing reality we live in but their houses and incomes are included in ratios.

Those apartment dwellers and renters are future first time buyers, a group housing cannot survive without. You can’t move up if others below are not moving up. So they most certainly are to be considered in housing affordability.

So Cal has gotten around historical affordability ratios with housing bubbles. No more though.
2.5-3 times earnings is a historically proven AFFORDABILITY gage. Meaning people can actually make their payments at those ratios.

SD average wage of $61k is probably high and even if not; wage deflation will probably bring it into the $50ks. Even 3x earnings at $55k aver. earnings is $165k for SD housing. So the HIGH end of affordability will probably be $165k.

Unbelievable? In 2006 how people would have thought you could buy a 2500 sq’ house in Temecula for $220k in 2009? Not many, and most would have thought the idea completely absurd. That rushed cut in prices was just the quick fall to “regular” prices. Now the discounts begin.

[/quote]

I have to go with TG on this, only during economic downturns does price/earning come in to play strongly in SoCal, once the economy is moving there is far greater discrepancy between the bottom and middle to top earners and then you have the self employed.

There is a sort of double whammy paradise & economic opportunity tax in SoCal.

[Nor-LA-SD-guy]

[quote=Rt.66][quote=temeculaguy]The misleading part about median income to median house it it fails to chop off the bottom 1/3 of earners who will not be/should not be buyers. S.D. is historically in the 4-7x median to median with some sub 4 years and the most recent bubble hitting 11. Apartments dwellers are included in the median income but the apartments themselves are not included in the median sales price because they are not sold individually. So you are including players into the statistical game on one side of the formula yet they aren’t on the other side. If nothing was rented and all apartments were individually owned as condos the numbers would be true, the current formula is flawed.

S.D. had a worse median to median ratio than detroit and I’ll bet Hawaii is worse than S.D., history of a particular market matter, not national or rustbelt numbers.

In fact I ran Lahaina in Maui, 61k median income, 1.8 million median home price

http://realestate.yahoo.com/Hawaii/Lahaina/neighborhoods;_ylt=AgdtNwgl5yQZNgk2QDrAHvKWxol4?p=lahaina%2C+hawaii&redir=1

If rt.66 is right and we get to buy a pad on maui for 2.5x median income, I’ll pack my shit right now.

I actually like Southwest Maui better (Kihei, Wailea, Makena) and the median there was only 54k, the good news is that houses were much cheaper, 850k median, so when I can get one for 125k, I wont even bother packing, I’ll get new stuff once I get there.

http://realestate.yahoo.com/Hawaii/Kihei/neighborhoods;_ylt=AgdtNwgl5yQZNgk2QDrAHvKWxol4?p=Kihei%2C+HI&search=Search&redir=1%5B/quote%5D

So a proven 100 year old housing affordability ratio (price x average wages) is no longer accurate because we have a new dynamic called renters and low earners to contend with?

If you chop off the bottom 1/3 won’t you logically chop off the top 1/3 as well? SD especially has lots of millionaires and even billionaires that throw the average way up.

Millionaires and billionaires are not players in the housing reality we live in but their houses and incomes are included in ratios.

Those apartment dwellers and renters are future first time buyers, a group housing cannot survive without. You can’t move up if others below are not moving up. So they most certainly are to be considered in housing affordability.

So Cal has gotten around historical affordability ratios with housing bubbles. No more though.
2.5-3 times earnings is a historically proven AFFORDABILITY gage. Meaning people can actually make their payments at those ratios.

SD average wage of $61k is probably high and even if not; wage deflation will probably bring it into the $50ks. Even 3x earnings at $55k aver. earnings is $165k for SD housing. So the HIGH end of affordability will probably be $165k.

Unbelievable? In 2006 how people would have thought you could buy a 2500 sq’ house in Temecula for $220k in 2009? Not many, and most would have thought the idea completely absurd. That rushed cut in prices was just the quick fall to “regular” prices. Now the discounts begin.

[/quote]

I have to go with TG on this, only during economic downturns does price/earning come in to play strongly in SoCal, once the economy is moving there is far greater discrepancy between the bottom and middle to top earners and then you have the self employed.

There is a sort of double whammy paradise & economic opportunity tax in SoCal.

[Nor-LA-SD-guy]

[quote=Rt.66][quote=temeculaguy]The misleading part about median income to median house it it fails to chop off the bottom 1/3 of earners who will not be/should not be buyers. S.D. is historically in the 4-7x median to median with some sub 4 years and the most recent bubble hitting 11. Apartments dwellers are included in the median income but the apartments themselves are not included in the median sales price because they are not sold individually. So you are including players into the statistical game on one side of the formula yet they aren’t on the other side. If nothing was rented and all apartments were individually owned as condos the numbers would be true, the current formula is flawed.

S.D. had a worse median to median ratio than detroit and I’ll bet Hawaii is worse than S.D., history of a particular market matter, not national or rustbelt numbers.

In fact I ran Lahaina in Maui, 61k median income, 1.8 million median home price

http://realestate.yahoo.com/Hawaii/Lahaina/neighborhoods;_ylt=AgdtNwgl5yQZNgk2QDrAHvKWxol4?p=lahaina%2C+hawaii&redir=1

If rt.66 is right and we get to buy a pad on maui for 2.5x median income, I’ll pack my shit right now.

I actually like Southwest Maui better (Kihei, Wailea, Makena) and the median there was only 54k, the good news is that houses were much cheaper, 850k median, so when I can get one for 125k, I wont even bother packing, I’ll get new stuff once I get there.

http://realestate.yahoo.com/Hawaii/Kihei/neighborhoods;_ylt=AgdtNwgl5yQZNgk2QDrAHvKWxol4?p=Kihei%2C+HI&search=Search&redir=1%5B/quote%5D

So a proven 100 year old housing affordability ratio (price x average wages) is no longer accurate because we have a new dynamic called renters and low earners to contend with?

If you chop off the bottom 1/3 won’t you logically chop off the top 1/3 as well? SD especially has lots of millionaires and even billionaires that throw the average way up.

Millionaires and billionaires are not players in the housing reality we live in but their houses and incomes are included in ratios.

Those apartment dwellers and renters are future first time buyers, a group housing cannot survive without. You can’t move up if others below are not moving up. So they most certainly are to be considered in housing affordability.

So Cal has gotten around historical affordability ratios with housing bubbles. No more though.
2.5-3 times earnings is a historically proven AFFORDABILITY gage. Meaning people can actually make their payments at those ratios.

SD average wage of $61k is probably high and even if not; wage deflation will probably bring it into the $50ks. Even 3x earnings at $55k aver. earnings is $165k for SD housing. So the HIGH end of affordability will probably be $165k.

Unbelievable? In 2006 how people would have thought you could buy a 2500 sq’ house in Temecula for $220k in 2009? Not many, and most would have thought the idea completely absurd. That rushed cut in prices was just the quick fall to “regular” prices. Now the discounts begin.

[/quote]

I have to go with TG on this, only during economic downturns does price/earning come in to play strongly in SoCal, once the economy is moving there is far greater discrepancy between the bottom and middle to top earners and then you have the self employed.

There is a sort of double whammy paradise & economic opportunity tax in SoCal.

[Nor-LA-SD-guy]

[quote=Rt.66][quote=temeculaguy]The misleading part about median income to median house it it fails to chop off the bottom 1/3 of earners who will not be/should not be buyers. S.D. is historically in the 4-7x median to median with some sub 4 years and the most recent bubble hitting 11. Apartments dwellers are included in the median income but the apartments themselves are not included in the median sales price because they are not sold individually. So you are including players into the statistical game on one side of the formula yet they aren’t on the other side. If nothing was rented and all apartments were individually owned as condos the numbers would be true, the current formula is flawed.

S.D. had a worse median to median ratio than detroit and I’ll bet Hawaii is worse than S.D., history of a particular market matter, not national or rustbelt numbers.

In fact I ran Lahaina in Maui, 61k median income, 1.8 million median home price

http://realestate.yahoo.com/Hawaii/Lahaina/neighborhoods;_ylt=AgdtNwgl5yQZNgk2QDrAHvKWxol4?p=lahaina%2C+hawaii&redir=1

If rt.66 is right and we get to buy a pad on maui for 2.5x median income, I’ll pack my shit right now.

I actually like Southwest Maui better (Kihei, Wailea, Makena) and the median there was only 54k, the good news is that houses were much cheaper, 850k median, so when I can get one for 125k, I wont even bother packing, I’ll get new stuff once I get there.

http://realestate.yahoo.com/Hawaii/Kihei/neighborhoods;_ylt=AgdtNwgl5yQZNgk2QDrAHvKWxol4?p=Kihei%2C+HI&search=Search&redir=1%5B/quote%5D

So a proven 100 year old housing affordability ratio (price x average wages) is no longer accurate because we have a new dynamic called renters and low earners to contend with?

If you chop off the bottom 1/3 won’t you logically chop off the top 1/3 as well? SD especially has lots of millionaires and even billionaires that throw the average way up.

Millionaires and billionaires are not players in the housing reality we live in but their houses and incomes are included in ratios.

Those apartment dwellers and renters are future first time buyers, a group housing cannot survive without. You can’t move up if others below are not moving up. So they most certainly are to be considered in housing affordability.

So Cal has gotten around historical affordability ratios with housing bubbles. No more though.
2.5-3 times earnings is a historically proven AFFORDABILITY gage. Meaning people can actually make their payments at those ratios.

SD average wage of $61k is probably high and even if not; wage deflation will probably bring it into the $50ks. Even 3x earnings at $55k aver. earnings is $165k for SD housing. So the HIGH end of affordability will probably be $165k.

Unbelievable? In 2006 how people would have thought you could buy a 2500 sq’ house in Temecula for $220k in 2009? Not many, and most would have thought the idea completely absurd. That rushed cut in prices was just the quick fall to “regular” prices. Now the discounts begin.

[/quote]

I have to go with TG on this, only during economic downturns does price/earning come in to play strongly in SoCal, once the economy is moving there is far greater discrepancy between the bottom and middle to top earners and then you have the self employed.

There is a sort of double whammy paradise & economic opportunity tax in SoCal.

[Nor-LA-SD-guy]

[quote=Rt.66][quote=Nor-LA-SD-guy][ One thing I would add here is, I think a lot of people on this board keep comparing this bubble to (thinking is like) 1991-1997 .

This bubble is nothing like 1991-1997, in that burst a large part of the industry picked up and left taking a lot of the most talented people in the region with them. That’s not happening this time.

I would guess that when the economy turns, the market will SLOWLY start to recover, That being said I would think by 2017 we would be back close to peak price …

OK everyone go ahead take your best shot ,,, Just kidding.

[/quote]

You are correct. In 1991-1997 “a large part of “the” industry picked up and left”. Today ALL employers are cutting back. Worst unemployment in 25-30 years, right now and gaining steam fast.

As for this depression versus previous ones?

” The state’s economic decline is sweeping, making the recession the “worst in the postwar period,” DeVol director of regional economics for the Milken Institute in Santa Monica said”

As for losing talented people we can check that off too. Last few reports I read showed CA is losing upper-middle class educated people in droves and growing only through immigration.

Thanks for playing:)[/quote]

Actually there has been a fairly large domestic migration into SoCal over the last year, that is keeping our (now don’t get me wrong unemployment is bad in SoCal) but the domestic migration is keeping our unemployment about 2% higher due to people moving here from other states and looking for work here.

This happen during the great depression and during the 1980-1983 recession as well.

I think most can remember what happen to SoCal housing after those ended.

[Nor-LA-SD-guy]

[quote=Rt.66][quote=Nor-LA-SD-guy][ One thing I would add here is, I think a lot of people on this board keep comparing this bubble to (thinking is like) 1991-1997 .

This bubble is nothing like 1991-1997, in that burst a large part of the industry picked up and left taking a lot of the most talented people in the region with them. That’s not happening this time.

I would guess that when the economy turns, the market will SLOWLY start to recover, That being said I would think by 2017 we would be back close to peak price …

OK everyone go ahead take your best shot ,,, Just kidding.

[/quote]

You are correct. In 1991-1997 “a large part of “the” industry picked up and left”. Today ALL employers are cutting back. Worst unemployment in 25-30 years, right now and gaining steam fast.

As for this depression versus previous ones?

” The state’s economic decline is sweeping, making the recession the “worst in the postwar period,” DeVol director of regional economics for the Milken Institute in Santa Monica said”

As for losing talented people we can check that off too. Last few reports I read showed CA is losing upper-middle class educated people in droves and growing only through immigration.

Thanks for playing:)[/quote]

Actually there has been a fairly large domestic migration into SoCal over the last year, that is keeping our (now don’t get me wrong unemployment is bad in SoCal) but the domestic migration is keeping our unemployment about 2% higher due to people moving here from other states and looking for work here.

This happen during the great depression and during the 1980-1983 recession as well.

I think most can remember what happen to SoCal housing after those ended.

[Nor-LA-SD-guy]

[quote=Rt.66][quote=Nor-LA-SD-guy][ One thing I would add here is, I think a lot of people on this board keep comparing this bubble to (thinking is like) 1991-1997 .

This bubble is nothing like 1991-1997, in that burst a large part of the industry picked up and left taking a lot of the most talented people in the region with them. That’s not happening this time.

I would guess that when the economy turns, the market will SLOWLY start to recover, That being said I would think by 2017 we would be back close to peak price …

OK everyone go ahead take your best shot ,,, Just kidding.

[/quote]

You are correct. In 1991-1997 “a large part of “the” industry picked up and left”. Today ALL employers are cutting back. Worst unemployment in 25-30 years, right now and gaining steam fast.

As for this depression versus previous ones?

” The state’s economic decline is sweeping, making the recession the “worst in the postwar period,” DeVol director of regional economics for the Milken Institute in Santa Monica said”

As for losing talented people we can check that off too. Last few reports I read showed CA is losing upper-middle class educated people in droves and growing only through immigration.

Thanks for playing:)[/quote]

Actually there has been a fairly large domestic migration into SoCal over the last year, that is keeping our (now don’t get me wrong unemployment is bad in SoCal) but the domestic migration is keeping our unemployment about 2% higher due to people moving here from other states and looking for work here.

This happen during the great depression and during the 1980-1983 recession as well.

I think most can remember what happen to SoCal housing after those ended.

[Nor-LA-SD-guy]

[quote=Rt.66][quote=Nor-LA-SD-guy][ One thing I would add here is, I think a lot of people on this board keep comparing this bubble to (thinking is like) 1991-1997 .

This bubble is nothing like 1991-1997, in that burst a large part of the industry picked up and left taking a lot of the most talented people in the region with them. That’s not happening this time.

I would guess that when the economy turns, the market will SLOWLY start to recover, That being said I would think by 2017 we would be back close to peak price …

OK everyone go ahead take your best shot ,,, Just kidding.

[/quote]

You are correct. In 1991-1997 “a large part of “the” industry picked up and left”. Today ALL employers are cutting back. Worst unemployment in 25-30 years, right now and gaining steam fast.

As for this depression versus previous ones?

” The state’s economic decline is sweeping, making the recession the “worst in the postwar period,” DeVol director of regional economics for the Milken Institute in Santa Monica said”

As for losing talented people we can check that off too. Last few reports I read showed CA is losing upper-middle class educated people in droves and growing only through immigration.

Thanks for playing:)[/quote]

Actually there has been a fairly large domestic migration into SoCal over the last year, that is keeping our (now don’t get me wrong unemployment is bad in SoCal) but the domestic migration is keeping our unemployment about 2% higher due to people moving here from other states and looking for work here.

This happen during the great depression and during the 1980-1983 recession as well.

I think most can remember what happen to SoCal housing after those ended.

[Author]

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