California homes are about 35% to 40% overvalued

[(former)FormerSanDiegan]

Undervalued in 2000? If we believe the GS report with a median of $375k that would make the median home 7x the median income. I’m not sure how they as so called economists can make the assumption that this is fiscally a good thing. It seems to me that median homes should be 3x the median income or in line with rents.

7x the median income was near the last low.

Regarding median price to be 3X median income.
I will explain why that notion is completely bogus, since it crops up here occasionally. The reason is that it applies a microeconomic principle to a macroeconomic statistic.

It is correct that a home buyer can typically afford a home priced at 3-4 x their income using typical standards. However, consider that in Southern California about 50% of the population rents. The other 50% live in a mix of houses and condos. Therefore, it is more likely that the 70th or 75th percentile in income is likely to line up with the median price of a single family home. Recently it was as high as the 90th percentile. At the last low in San Diego in the mid 1990s it approached the 60th percentile, considerably above the median.

Also, remember that median incomes include those who are transitioning between careers, working part time, underemployed, going to school, etc. Those who buy homes are typically (but perhaps not in recent years) in a position with more stable income and a group that naturally selects out people in transitory jobs.

[golfproz]

I paid 2.5x my income for my current home (at the time I was probably making less than median). It was not that long ago and it’s in CA. California has not moved, it’s not in a better location of the planet than it was 10 years ago. If anything it’s worse than it was 10 years ago so property values should have declined. Of course it’s going to cost more in CA than in Kansas. But then again the median income is higher here too. People have gotten brainwashed into thinking $500k is a good deal for a starter home. BS, snap out of it, for $500k you should be able to buy a very nice home in a very nice area or a friggin estate in the IE.

[golfproz]

I paid 2.5x my income for my current home (at the time I was probably making less than median). It was not that long ago and it’s in CA. California has not moved, it’s not in a better location of the planet than it was 10 years ago. If anything it’s worse than it was 10 years ago so property values should have declined. Of course it’s going to cost more in CA than in Kansas. But then again the median income is higher here too. People have gotten brainwashed into thinking $500k is a good deal for a starter home. BS, snap out of it, for $500k you should be able to buy a very nice home in a very nice area or a friggin estate in the IE.

[golfproz]

I paid 2.5x my income for my current home (at the time I was probably making less than median). It was not that long ago and it’s in CA. California has not moved, it’s not in a better location of the planet than it was 10 years ago. If anything it’s worse than it was 10 years ago so property values should have declined. Of course it’s going to cost more in CA than in Kansas. But then again the median income is higher here too. People have gotten brainwashed into thinking $500k is a good deal for a starter home. BS, snap out of it, for $500k you should be able to buy a very nice home in a very nice area or a friggin estate in the IE.

[The-Shoveler]

You know it does cost about 100 sqf to maybe 150 sqf to build these things (not counting the cost of land),

so it’s not going to zero guy’s, Ie.. if you can find a good deal maybe you should go for it ….

Just my two cents guys …

[The-Shoveler]

You know it does cost about 100 sqf to maybe 150 sqf to build these things (not counting the cost of land),

so it’s not going to zero guy’s, Ie.. if you can find a good deal maybe you should go for it ….

Just my two cents guys …

[The-Shoveler]

You know it does cost about 100 sqf to maybe 150 sqf to build these things (not counting the cost of land),

so it’s not going to zero guy’s, Ie.. if you can find a good deal maybe you should go for it ….

Just my two cents guys …

[golfproz]

Tract homes don’t cost anywhere near $100 sq/ft to build. Nice tract homes can easily be built for under $60 a sq/ft and basic tract homes for just over $40.

[golfproz]

Tract homes don’t cost anywhere near $100 sq/ft to build. Nice tract homes can easily be built for under $60 a sq/ft and basic tract homes for just over $40.

[golfproz]

Tract homes don’t cost anywhere near $100 sq/ft to build. Nice tract homes can easily be built for under $60 a sq/ft and basic tract homes for just over $40.

[The-Shoveler]

60 a sqf … hmm,

Bring in the sewer, electric, gas, add streets etc…

and you can do this for less than 60 sqf !!

Wow dude we got to talk, I got this pice of land you see…

[The-Shoveler]

60 a sqf … hmm,

Bring in the sewer, electric, gas, add streets etc…

and you can do this for less than 60 sqf !!

Wow dude we got to talk, I got this pice of land you see…

[The-Shoveler]

60 a sqf … hmm,

Bring in the sewer, electric, gas, add streets etc…

and you can do this for less than 60 sqf !!

Wow dude we got to talk, I got this pice of land you see…

[NotCranky]

“Therefore, it is more likely that the 70th or 75th percentile in income is likely to line up with the median price of a single family home. Recently it was as high as the 90th percentile. At the last low in San Diego in the mid 1990s it approached the 60th percentile, considerably above the median.”

As usual you have smart thingsto say on the topic at hand that tend to balance out the discussion.

“You know it does cost about 100 sqf to maybe 150 sqf to build these things (not counting the cost of land),
so it’s not going to zero guy’s,”

It takes something to grow beautiful tomatoes too…but it doesn’t stop some from rotting on the vine. What I am saying, and it applies to both of your comments, is that housing is only as strong as the economy. We know it is going down because of the crazy lending based appreciation but we don’t know what kind of economy will be there to support it and for how long. The amount spent on something or what people were previously paying for something, regardless of any multiple of salary, could possibly be rendered historical footnotes. I doubt it but, for the sake of argument, I will pose this question.. how much are these houses worth in Mexico? Muy Poco.

[NotCranky]

“Therefore, it is more likely that the 70th or 75th percentile in income is likely to line up with the median price of a single family home. Recently it was as high as the 90th percentile. At the last low in San Diego in the mid 1990s it approached the 60th percentile, considerably above the median.”

As usual you have smart thingsto say on the topic at hand that tend to balance out the discussion.

“You know it does cost about 100 sqf to maybe 150 sqf to build these things (not counting the cost of land),
so it’s not going to zero guy’s,”

It takes something to grow beautiful tomatoes too…but it doesn’t stop some from rotting on the vine. What I am saying, and it applies to both of your comments, is that housing is only as strong as the economy. We know it is going down because of the crazy lending based appreciation but we don’t know what kind of economy will be there to support it and for how long. The amount spent on something or what people were previously paying for something, regardless of any multiple of salary, could possibly be rendered historical footnotes. I doubt it but, for the sake of argument, I will pose this question.. how much are these houses worth in Mexico? Muy Poco.

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