Basic affordability metrics

[bob2007]

I scanned this thread quickly, and I don’t yet see a similar post. The SD Union today profiled a family where the wife/nurse and husband/teacher had w2 income of $248k. They were conservative and had cash savings as well.

[Nicole]

I’m sorry if I don’t know much about this stuff, but I’m learning a lot from reading all of your posts.

Can someone explain to me how the San Diego inflated prices differs from the inflated prices of cities like New York or San Francisco? I’m just curious because I always just figured that the prices were so high here because of the “premium” factor like in San Fran or NYC. Is SD somehow different or are these other cities in the same situation.

-nicole
new house hunter

[Nicole]

I’m sorry if I don’t know much about this stuff, but I’m learning a lot from reading all of your posts.

Can someone explain to me how the San Diego inflated prices differs from the inflated prices of cities like New York or San Francisco? I’m just curious because I always just figured that the prices were so high here because of the “premium” factor like in San Fran or NYC. Is SD somehow different or are these other cities in the same situation.

-nicole
new house hunter

[Nicole]

I’m sorry if I don’t know much about this stuff, but I’m learning a lot from reading all of your posts.

Can someone explain to me how the San Diego inflated prices differs from the inflated prices of cities like New York or San Francisco? I’m just curious because I always just figured that the prices were so high here because of the “premium” factor like in San Fran or NYC. Is SD somehow different or are these other cities in the same situation.

-nicole
new house hunter

[Nicole]

I’m sorry if I don’t know much about this stuff, but I’m learning a lot from reading all of your posts.

Can someone explain to me how the San Diego inflated prices differs from the inflated prices of cities like New York or San Francisco? I’m just curious because I always just figured that the prices were so high here because of the “premium” factor like in San Fran or NYC. Is SD somehow different or are these other cities in the same situation.

-nicole
new house hunter

[Nicole]

I’m sorry if I don’t know much about this stuff, but I’m learning a lot from reading all of your posts.

Can someone explain to me how the San Diego inflated prices differs from the inflated prices of cities like New York or San Francisco? I’m just curious because I always just figured that the prices were so high here because of the “premium” factor like in San Fran or NYC. Is SD somehow different or are these other cities in the same situation.

-nicole
new house hunter

[SDEngineer]

JP:

I certainly wasn’t trying to question the Case-Shiller numbers, they’re one of the tools I’ve been using to attempt to figure the market out. They certainly do indicate the higher value areas were in a BIG bubble – just not nearly as much of a bubble as the lower value areas.

Rich Toscano’s charts which he posts here are very eye-opening. See here:

January Case-Shiller HPI

for one of his recent posts after the release of the January Case-Shiller numbers (bear in mind, we’ve seen another 3 months of depreciation since then). You can see that the high areas never got quite as overvalued as the lower areas, and haven’t fallen nearly as much from peak as them at this point – but there’s no indication that they won’t fall, just that they didn’t have as far to fall to begin with, and presumably had less subprimes to worry about along with owners with greater personal means to postpone financial problems. You’ll note that according to Rich’s charts, the low end areas have experienced the brunt of the depreciation so far, but the high and mid areas are still overpriced and will presumably revert to medians soon – and now all three groupings have roughly as far to fall to return to parity.

BTW, I think “normal” appreciation over a 8 year period would be somewhere around 30-40%. Housing generally tracks real inflation pretty accurately (though our recent inflation numbers are badly understated as a result of changes to the calculations they made in the late 90’s which have resulted in essentially ignoring a lot of energy and food inflation).

[SDEngineer]

JP:

I certainly wasn’t trying to question the Case-Shiller numbers, they’re one of the tools I’ve been using to attempt to figure the market out. They certainly do indicate the higher value areas were in a BIG bubble – just not nearly as much of a bubble as the lower value areas.

Rich Toscano’s charts which he posts here are very eye-opening. See here:

January Case-Shiller HPI

for one of his recent posts after the release of the January Case-Shiller numbers (bear in mind, we’ve seen another 3 months of depreciation since then). You can see that the high areas never got quite as overvalued as the lower areas, and haven’t fallen nearly as much from peak as them at this point – but there’s no indication that they won’t fall, just that they didn’t have as far to fall to begin with, and presumably had less subprimes to worry about along with owners with greater personal means to postpone financial problems. You’ll note that according to Rich’s charts, the low end areas have experienced the brunt of the depreciation so far, but the high and mid areas are still overpriced and will presumably revert to medians soon – and now all three groupings have roughly as far to fall to return to parity.

BTW, I think “normal” appreciation over a 8 year period would be somewhere around 30-40%. Housing generally tracks real inflation pretty accurately (though our recent inflation numbers are badly understated as a result of changes to the calculations they made in the late 90’s which have resulted in essentially ignoring a lot of energy and food inflation).

[SDEngineer]

JP:

I certainly wasn’t trying to question the Case-Shiller numbers, they’re one of the tools I’ve been using to attempt to figure the market out. They certainly do indicate the higher value areas were in a BIG bubble – just not nearly as much of a bubble as the lower value areas.

Rich Toscano’s charts which he posts here are very eye-opening. See here:

January Case-Shiller HPI

for one of his recent posts after the release of the January Case-Shiller numbers (bear in mind, we’ve seen another 3 months of depreciation since then). You can see that the high areas never got quite as overvalued as the lower areas, and haven’t fallen nearly as much from peak as them at this point – but there’s no indication that they won’t fall, just that they didn’t have as far to fall to begin with, and presumably had less subprimes to worry about along with owners with greater personal means to postpone financial problems. You’ll note that according to Rich’s charts, the low end areas have experienced the brunt of the depreciation so far, but the high and mid areas are still overpriced and will presumably revert to medians soon – and now all three groupings have roughly as far to fall to return to parity.

BTW, I think “normal” appreciation over a 8 year period would be somewhere around 30-40%. Housing generally tracks real inflation pretty accurately (though our recent inflation numbers are badly understated as a result of changes to the calculations they made in the late 90’s which have resulted in essentially ignoring a lot of energy and food inflation).

[SDEngineer]

JP:

I certainly wasn’t trying to question the Case-Shiller numbers, they’re one of the tools I’ve been using to attempt to figure the market out. They certainly do indicate the higher value areas were in a BIG bubble – just not nearly as much of a bubble as the lower value areas.

Rich Toscano’s charts which he posts here are very eye-opening. See here:

January Case-Shiller HPI

for one of his recent posts after the release of the January Case-Shiller numbers (bear in mind, we’ve seen another 3 months of depreciation since then). You can see that the high areas never got quite as overvalued as the lower areas, and haven’t fallen nearly as much from peak as them at this point – but there’s no indication that they won’t fall, just that they didn’t have as far to fall to begin with, and presumably had less subprimes to worry about along with owners with greater personal means to postpone financial problems. You’ll note that according to Rich’s charts, the low end areas have experienced the brunt of the depreciation so far, but the high and mid areas are still overpriced and will presumably revert to medians soon – and now all three groupings have roughly as far to fall to return to parity.

BTW, I think “normal” appreciation over a 8 year period would be somewhere around 30-40%. Housing generally tracks real inflation pretty accurately (though our recent inflation numbers are badly understated as a result of changes to the calculations they made in the late 90’s which have resulted in essentially ignoring a lot of energy and food inflation).

[SDEngineer]

JP:

I certainly wasn’t trying to question the Case-Shiller numbers, they’re one of the tools I’ve been using to attempt to figure the market out. They certainly do indicate the higher value areas were in a BIG bubble – just not nearly as much of a bubble as the lower value areas.

Rich Toscano’s charts which he posts here are very eye-opening. See here:

January Case-Shiller HPI

for one of his recent posts after the release of the January Case-Shiller numbers (bear in mind, we’ve seen another 3 months of depreciation since then). You can see that the high areas never got quite as overvalued as the lower areas, and haven’t fallen nearly as much from peak as them at this point – but there’s no indication that they won’t fall, just that they didn’t have as far to fall to begin with, and presumably had less subprimes to worry about along with owners with greater personal means to postpone financial problems. You’ll note that according to Rich’s charts, the low end areas have experienced the brunt of the depreciation so far, but the high and mid areas are still overpriced and will presumably revert to medians soon – and now all three groupings have roughly as far to fall to return to parity.

BTW, I think “normal” appreciation over a 8 year period would be somewhere around 30-40%. Housing generally tracks real inflation pretty accurately (though our recent inflation numbers are badly understated as a result of changes to the calculations they made in the late 90’s which have resulted in essentially ignoring a lot of energy and food inflation).

[SDEngineer]

Nesposito:

Some bubble areas were more bubbly than others, but the nation as a whole has experienced this housing bubble.

San Diego is no different from the other inflated cities, all of which are dropping at this point. New York didn’t have as much of a bubble to begin with (very high salaries had always supported a very high median home price in the city), but even so, their prices are also now dropping. The SF Bay area is also dropping like a rock right now, just not quite as much of a rock as San Diego, Phoenix, Miami, and Las Vegas, which is why those cities are getting the majority of the press.

San Diego did hit the hyperinflation phase of the bubble about a year earlier than most of the other cities, and we also topped out earlier, but at this point, the Case-Shiller indexes (and the other indexes) now have pretty much all of the bubble cities in free-fall with regards to prices.

[SDEngineer]

Nesposito:

Some bubble areas were more bubbly than others, but the nation as a whole has experienced this housing bubble.

San Diego is no different from the other inflated cities, all of which are dropping at this point. New York didn’t have as much of a bubble to begin with (very high salaries had always supported a very high median home price in the city), but even so, their prices are also now dropping. The SF Bay area is also dropping like a rock right now, just not quite as much of a rock as San Diego, Phoenix, Miami, and Las Vegas, which is why those cities are getting the majority of the press.

San Diego did hit the hyperinflation phase of the bubble about a year earlier than most of the other cities, and we also topped out earlier, but at this point, the Case-Shiller indexes (and the other indexes) now have pretty much all of the bubble cities in free-fall with regards to prices.

[SDEngineer]

Nesposito:

Some bubble areas were more bubbly than others, but the nation as a whole has experienced this housing bubble.

San Diego is no different from the other inflated cities, all of which are dropping at this point. New York didn’t have as much of a bubble to begin with (very high salaries had always supported a very high median home price in the city), but even so, their prices are also now dropping. The SF Bay area is also dropping like a rock right now, just not quite as much of a rock as San Diego, Phoenix, Miami, and Las Vegas, which is why those cities are getting the majority of the press.

San Diego did hit the hyperinflation phase of the bubble about a year earlier than most of the other cities, and we also topped out earlier, but at this point, the Case-Shiller indexes (and the other indexes) now have pretty much all of the bubble cities in free-fall with regards to prices.

[SDEngineer]

Nesposito:

Some bubble areas were more bubbly than others, but the nation as a whole has experienced this housing bubble.

San Diego is no different from the other inflated cities, all of which are dropping at this point. New York didn’t have as much of a bubble to begin with (very high salaries had always supported a very high median home price in the city), but even so, their prices are also now dropping. The SF Bay area is also dropping like a rock right now, just not quite as much of a rock as San Diego, Phoenix, Miami, and Las Vegas, which is why those cities are getting the majority of the press.

San Diego did hit the hyperinflation phase of the bubble about a year earlier than most of the other cities, and we also topped out earlier, but at this point, the Case-Shiller indexes (and the other indexes) now have pretty much all of the bubble cities in free-fall with regards to prices.

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