[bigmoneysalsa]

Good stuff FSD, whybuy. So it seems like the last bottom was around 4.6 * median income. Not affordable by conservative measures, but way better than anything we’ve seen in a while.

Is there any good reason to think we won’t get down to at least 5 * income at the next bottom? I don’t see any.

sdrealtor, don’t get me wrong I agree with your overarching point that prices aren’t determined by incomes. SD is an expensive place to buy, but it’s also an expensive place to rent. Ultimately its the PE ratio that shows how out of whack prices are. I wish people would focus more on that than on incomes.

[bigmoneysalsa]

Good stuff FSD, whybuy. So it seems like the last bottom was around 4.6 * median income. Not affordable by conservative measures, but way better than anything we’ve seen in a while.

Is there any good reason to think we won’t get down to at least 5 * income at the next bottom? I don’t see any.

sdrealtor, don’t get me wrong I agree with your overarching point that prices aren’t determined by incomes. SD is an expensive place to buy, but it’s also an expensive place to rent. Ultimately its the PE ratio that shows how out of whack prices are. I wish people would focus more on that than on incomes.

[bigmoneysalsa]

From factfinder.census.gov, year 2000, San Diego County

Median family income 53,438

Single-family owner-occupied homes Median value 227,200

And remember this was 2000, after the market had already been booming for 4 straight years.

In the mid 1990’s a median value single family home was absolutely affordable for a median income family. Saying that we will never get to that point again is a rather bold statement.

[bigmoneysalsa]

From factfinder.census.gov, year 2000, San Diego County

Median family income 53,438

Single-family owner-occupied homes Median value 227,200

And remember this was 2000, after the market had already been booming for 4 straight years.

In the mid 1990’s a median value single family home was absolutely affordable for a median income family. Saying that we will never get to that point again is a rather bold statement.

[bigmoneysalsa]

From factfinder.census.gov, year 2000, San Diego County

Median family income 53,438

Single-family owner-occupied homes Median value 227,200

And remember this was 2000, after the market had already been booming for 4 straight years.

In the mid 1990’s a median value single family home was absolutely affordable for a median income family. Saying that we will never get to that point again is a rather bold statement.

[bigmoneysalsa]

From factfinder.census.gov, year 2000, San Diego County

Median family income 53,438

Single-family owner-occupied homes Median value 227,200

And remember this was 2000, after the market had already been booming for 4 straight years.

In the mid 1990’s a median value single family home was absolutely affordable for a median income family. Saying that we will never get to that point again is a rather bold statement.

[bigmoneysalsa]

From factfinder.census.gov, year 2000, San Diego County

Median family income 53,438

Single-family owner-occupied homes Median value 227,200

And remember this was 2000, after the market had already been booming for 4 straight years.

In the mid 1990’s a median value single family home was absolutely affordable for a median income family. Saying that we will never get to that point again is a rather bold statement.

[bigmoneysalsa]

sdrealtor, I follow your logic, but there is no way that the 75th percentile is even close to being the right number. That would basically imply that every above-median household owns and every below-median household does not. The 50th percentile is too low and the real number is somewhere between 50 and 75, but exactly where is hard to say.

The more important fact is that historically before this once-in-a-generation economic bubble came along the median home price has been at or slightly above the level that was affordable to a median household. Those above the median could buy a little less and save money to spend on other things; many below the median could stretch a little and buy a medianish home. Incomes do not put a floor on how low prices can go.

[bigmoneysalsa]

sdrealtor, I follow your logic, but there is no way that the 75th percentile is even close to being the right number. That would basically imply that every above-median household owns and every below-median household does not. The 50th percentile is too low and the real number is somewhere between 50 and 75, but exactly where is hard to say.

The more important fact is that historically before this once-in-a-generation economic bubble came along the median home price has been at or slightly above the level that was affordable to a median household. Those above the median could buy a little less and save money to spend on other things; many below the median could stretch a little and buy a medianish home. Incomes do not put a floor on how low prices can go.

[bigmoneysalsa]

sdrealtor, I follow your logic, but there is no way that the 75th percentile is even close to being the right number. That would basically imply that every above-median household owns and every below-median household does not. The 50th percentile is too low and the real number is somewhere between 50 and 75, but exactly where is hard to say.

The more important fact is that historically before this once-in-a-generation economic bubble came along the median home price has been at or slightly above the level that was affordable to a median household. Those above the median could buy a little less and save money to spend on other things; many below the median could stretch a little and buy a medianish home. Incomes do not put a floor on how low prices can go.

[bigmoneysalsa]

sdrealtor, I follow your logic, but there is no way that the 75th percentile is even close to being the right number. That would basically imply that every above-median household owns and every below-median household does not. The 50th percentile is too low and the real number is somewhere between 50 and 75, but exactly where is hard to say.

The more important fact is that historically before this once-in-a-generation economic bubble came along the median home price has been at or slightly above the level that was affordable to a median household. Those above the median could buy a little less and save money to spend on other things; many below the median could stretch a little and buy a medianish home. Incomes do not put a floor on how low prices can go.

[bigmoneysalsa]

sdrealtor, I follow your logic, but there is no way that the 75th percentile is even close to being the right number. That would basically imply that every above-median household owns and every below-median household does not. The 50th percentile is too low and the real number is somewhere between 50 and 75, but exactly where is hard to say.

The more important fact is that historically before this once-in-a-generation economic bubble came along the median home price has been at or slightly above the level that was affordable to a median household. Those above the median could buy a little less and save money to spend on other things; many below the median could stretch a little and buy a medianish home. Incomes do not put a floor on how low prices can go.

[bigmoneysalsa]

Are prices flat?

The S&P/Case-Shiller Home Price Index for SD is down 6.8% from Nov 2005 to March 2007. These are nominal prices, and include resale SFRs only.

Now, if you factor in that condo and new home prices probably have not held up as well, you could put the overall level of prices declines for the period a little higher, say 8 or maybe 9%. Factor in a year and a half worth of inflation, and the developments since this March, and I’d say a reasonable guesstimate is that prices are down somewhere between 10 and 15% from peak right now. Nothing earth-shattering, but certainly an encouraging start.

[bigmoneysalsa]

Are prices flat?

The S&P/Case-Shiller Home Price Index for SD is down 6.8% from Nov 2005 to March 2007. These are nominal prices, and include resale SFRs only.

Now, if you factor in that condo and new home prices probably have not held up as well, you could put the overall level of prices declines for the period a little higher, say 8 or maybe 9%. Factor in a year and a half worth of inflation, and the developments since this March, and I’d say a reasonable guesstimate is that prices are down somewhere between 10 and 15% from peak right now. Nothing earth-shattering, but certainly an encouraging start.

[bigmoneysalsa]

Here’s an idea. Have the city put a massive tax on houses that have been vacant for more than X number of months. Something really hardcore, like 1% per month. That way the title holder must lower the price to sell or rent the place out quickly.

BTW, this could also have the secondary effect of driving prices down more quickly by forcing inventory to be liquidated.

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