[DWCAP]

esmith,
I never said MM wasnt a first time owner market, while CV is a move up market. What I ment was the people who the bank wants to lend to dont want to live in this area generally. Good people live here, I hope to own my first home here someday, but more and more the traditional people who bought here are being squeezed out by higher costs and lower than normal pay raises. That is gonna squeeze the pool of potential buyers, lowering demand.
Second off. Lets explore affordability using your numbers. You say in 2001 median prices were 240000, and median wages $47000. That gives us a ratio of 5.1 years of income to cost of house (median income to median house). In 2007, median wages are 59000. You state that housing should be ~400000. That gives us a ratio of 6.8. That is an extra 1.7 years of wages or roughly a 33% increase. When factoring in increased costs of living, where are people in their late 20’s to early 30’s with good incomes but short (ie <10 year) credit histories and the resulting higher interest rates gonna get that increased buying power? Using the 5.1 income/cost ratio, median prices should be $300000. This is a roughly 10%-20% premium to rents, and low and behold down payments are usually in that range.
As for down payments, ofcourse people use to do it. They always have, always will. I have been saving money since I was 14. I have my down payment. Could have put 20% back in 2005 at the peak. I got lucky, most are not as lucky as I am. What I ment by that is it will affect demand. I dont care how much you want a house, if the bank wont lend and you make too much for some of these questionable government sponsored down payment programs, you cant buy. Prices will have to reflect this.

[DWCAP]

esmith,
I never said MM wasnt a first time owner market, while CV is a move up market. What I ment was the people who the bank wants to lend to dont want to live in this area generally. Good people live here, I hope to own my first home here someday, but more and more the traditional people who bought here are being squeezed out by higher costs and lower than normal pay raises. That is gonna squeeze the pool of potential buyers, lowering demand.
Second off. Lets explore affordability using your numbers. You say in 2001 median prices were 240000, and median wages $47000. That gives us a ratio of 5.1 years of income to cost of house (median income to median house). In 2007, median wages are 59000. You state that housing should be ~400000. That gives us a ratio of 6.8. That is an extra 1.7 years of wages or roughly a 33% increase. When factoring in increased costs of living, where are people in their late 20’s to early 30’s with good incomes but short (ie <10 year) credit histories and the resulting higher interest rates gonna get that increased buying power? Using the 5.1 income/cost ratio, median prices should be $300000. This is a roughly 10%-20% premium to rents, and low and behold down payments are usually in that range.
As for down payments, ofcourse people use to do it. They always have, always will. I have been saving money since I was 14. I have my down payment. Could have put 20% back in 2005 at the peak. I got lucky, most are not as lucky as I am. What I ment by that is it will affect demand. I dont care how much you want a house, if the bank wont lend and you make too much for some of these questionable government sponsored down payment programs, you cant buy. Prices will have to reflect this.

[DWCAP]

esmith,
I never said MM wasnt a first time owner market, while CV is a move up market. What I ment was the people who the bank wants to lend to dont want to live in this area generally. Good people live here, I hope to own my first home here someday, but more and more the traditional people who bought here are being squeezed out by higher costs and lower than normal pay raises. That is gonna squeeze the pool of potential buyers, lowering demand.
Second off. Lets explore affordability using your numbers. You say in 2001 median prices were 240000, and median wages $47000. That gives us a ratio of 5.1 years of income to cost of house (median income to median house). In 2007, median wages are 59000. You state that housing should be ~400000. That gives us a ratio of 6.8. That is an extra 1.7 years of wages or roughly a 33% increase. When factoring in increased costs of living, where are people in their late 20’s to early 30’s with good incomes but short (ie <10 year) credit histories and the resulting higher interest rates gonna get that increased buying power? Using the 5.1 income/cost ratio, median prices should be $300000. This is a roughly 10%-20% premium to rents, and low and behold down payments are usually in that range.
As for down payments, ofcourse people use to do it. They always have, always will. I have been saving money since I was 14. I have my down payment. Could have put 20% back in 2005 at the peak. I got lucky, most are not as lucky as I am. What I ment by that is it will affect demand. I dont care how much you want a house, if the bank wont lend and you make too much for some of these questionable government sponsored down payment programs, you cant buy. Prices will have to reflect this.

[DWCAP]

esmith,
I never said MM wasnt a first time owner market, while CV is a move up market. What I ment was the people who the bank wants to lend to dont want to live in this area generally. Good people live here, I hope to own my first home here someday, but more and more the traditional people who bought here are being squeezed out by higher costs and lower than normal pay raises. That is gonna squeeze the pool of potential buyers, lowering demand.
Second off. Lets explore affordability using your numbers. You say in 2001 median prices were 240000, and median wages $47000. That gives us a ratio of 5.1 years of income to cost of house (median income to median house). In 2007, median wages are 59000. You state that housing should be ~400000. That gives us a ratio of 6.8. That is an extra 1.7 years of wages or roughly a 33% increase. When factoring in increased costs of living, where are people in their late 20’s to early 30’s with good incomes but short (ie <10 year) credit histories and the resulting higher interest rates gonna get that increased buying power? Using the 5.1 income/cost ratio, median prices should be $300000. This is a roughly 10%-20% premium to rents, and low and behold down payments are usually in that range.
As for down payments, ofcourse people use to do it. They always have, always will. I have been saving money since I was 14. I have my down payment. Could have put 20% back in 2005 at the peak. I got lucky, most are not as lucky as I am. What I ment by that is it will affect demand. I dont care how much you want a house, if the bank wont lend and you make too much for some of these questionable government sponsored down payment programs, you cant buy. Prices will have to reflect this.

[DWCAP]

esmith,
I never said MM wasnt a first time owner market, while CV is a move up market. What I ment was the people who the bank wants to lend to dont want to live in this area generally. Good people live here, I hope to own my first home here someday, but more and more the traditional people who bought here are being squeezed out by higher costs and lower than normal pay raises. That is gonna squeeze the pool of potential buyers, lowering demand.
Second off. Lets explore affordability using your numbers. You say in 2001 median prices were 240000, and median wages $47000. That gives us a ratio of 5.1 years of income to cost of house (median income to median house). In 2007, median wages are 59000. You state that housing should be ~400000. That gives us a ratio of 6.8. That is an extra 1.7 years of wages or roughly a 33% increase. When factoring in increased costs of living, where are people in their late 20’s to early 30’s with good incomes but short (ie <10 year) credit histories and the resulting higher interest rates gonna get that increased buying power? Using the 5.1 income/cost ratio, median prices should be $300000. This is a roughly 10%-20% premium to rents, and low and behold down payments are usually in that range.
As for down payments, ofcourse people use to do it. They always have, always will. I have been saving money since I was 14. I have my down payment. Could have put 20% back in 2005 at the peak. I got lucky, most are not as lucky as I am. What I ment by that is it will affect demand. I dont care how much you want a house, if the bank wont lend and you make too much for some of these questionable government sponsored down payment programs, you cant buy. Prices will have to reflect this.

[DWCAP]

I guess I got lucky, no rent increase. I think the landlords memory of 2 months vacancy hurt. Dont be afraid to move, they are not afraid to give large increases.

[DWCAP]

I guess I got lucky, no rent increase. I think the landlords memory of 2 months vacancy hurt. Dont be afraid to move, they are not afraid to give large increases.

[DWCAP]

I guess I got lucky, no rent increase. I think the landlords memory of 2 months vacancy hurt. Dont be afraid to move, they are not afraid to give large increases.

[DWCAP]

I guess I got lucky, no rent increase. I think the landlords memory of 2 months vacancy hurt. Dont be afraid to move, they are not afraid to give large increases.

[DWCAP]

I guess I got lucky, no rent increase. I think the landlords memory of 2 months vacancy hurt. Dont be afraid to move, they are not afraid to give large increases.

[DWCAP]

esmith,
I dont really agree with all your numbers. They seem to optimistic.
First check the main page just below the latest entry. In the graph Rich graphs wages since 2001 and they are up maybe 18%, not 30%. I know you said 2000, but I dont think there was a huge jump in wages the year we started sliding into the last recession.
Second, this is a lower middle class area unless you are north of Calle Cristobal. Overall wages may be up ~18%, but the bottom half isnt feeling the good times. Remember the supposed jobless recovery of 2003-05? No jobs result in no wage growth. What wages/jobs growth their was for this segment of the population was in real estate, and over inflated as you said. It wont keep.
Third, it isnt like what wage growth was seen isnt being eaten away by gas, utilities, food and other inflation that is alot higher. To assume that people can contribute the same level of income to payments now as they could after the longest and most broadly felt boom in the last century is ignoring the realities of 3.50 gas.
Fourth, sure interest rates are 5.8%, for you. Most middle income people dont have $80000, let alone that in cash to invest. And those nice low interest rates you use are only for the best buyers. Most of us dont actually get that rate, especially from risk adverse banks demanding 20% down payments that the “buyers” just dont have.
People who can buy in carmel valley can easily buy in MM, but that doesnt mean that they want to live in MM.

Plus, something for FLU and all the rest to think about. In the same graph rich posted, rents are also tracked. They are up way over wages. (~10% more) If we are really sliding into a recession, with the job losses and everything else, do you really think that you can get a +10-15% rise in rents as is being discussed in other threads? The easy increases have already been had, anymore and you seriously jeperdize demand. I know, as I just posted, my current place sat empty for 2 months until they dropped the increase and accepted our application.

[DWCAP]

esmith,
I dont really agree with all your numbers. They seem to optimistic.
First check the main page just below the latest entry. In the graph Rich graphs wages since 2001 and they are up maybe 18%, not 30%. I know you said 2000, but I dont think there was a huge jump in wages the year we started sliding into the last recession.
Second, this is a lower middle class area unless you are north of Calle Cristobal. Overall wages may be up ~18%, but the bottom half isnt feeling the good times. Remember the supposed jobless recovery of 2003-05? No jobs result in no wage growth. What wages/jobs growth their was for this segment of the population was in real estate, and over inflated as you said. It wont keep.
Third, it isnt like what wage growth was seen isnt being eaten away by gas, utilities, food and other inflation that is alot higher. To assume that people can contribute the same level of income to payments now as they could after the longest and most broadly felt boom in the last century is ignoring the realities of 3.50 gas.
Fourth, sure interest rates are 5.8%, for you. Most middle income people dont have $80000, let alone that in cash to invest. And those nice low interest rates you use are only for the best buyers. Most of us dont actually get that rate, especially from risk adverse banks demanding 20% down payments that the “buyers” just dont have.
People who can buy in carmel valley can easily buy in MM, but that doesnt mean that they want to live in MM.

Plus, something for FLU and all the rest to think about. In the same graph rich posted, rents are also tracked. They are up way over wages. (~10% more) If we are really sliding into a recession, with the job losses and everything else, do you really think that you can get a +10-15% rise in rents as is being discussed in other threads? The easy increases have already been had, anymore and you seriously jeperdize demand. I know, as I just posted, my current place sat empty for 2 months until they dropped the increase and accepted our application.

[DWCAP]

esmith,
I dont really agree with all your numbers. They seem to optimistic.
First check the main page just below the latest entry. In the graph Rich graphs wages since 2001 and they are up maybe 18%, not 30%. I know you said 2000, but I dont think there was a huge jump in wages the year we started sliding into the last recession.
Second, this is a lower middle class area unless you are north of Calle Cristobal. Overall wages may be up ~18%, but the bottom half isnt feeling the good times. Remember the supposed jobless recovery of 2003-05? No jobs result in no wage growth. What wages/jobs growth their was for this segment of the population was in real estate, and over inflated as you said. It wont keep.
Third, it isnt like what wage growth was seen isnt being eaten away by gas, utilities, food and other inflation that is alot higher. To assume that people can contribute the same level of income to payments now as they could after the longest and most broadly felt boom in the last century is ignoring the realities of 3.50 gas.
Fourth, sure interest rates are 5.8%, for you. Most middle income people dont have $80000, let alone that in cash to invest. And those nice low interest rates you use are only for the best buyers. Most of us dont actually get that rate, especially from risk adverse banks demanding 20% down payments that the “buyers” just dont have.
People who can buy in carmel valley can easily buy in MM, but that doesnt mean that they want to live in MM.

Plus, something for FLU and all the rest to think about. In the same graph rich posted, rents are also tracked. They are up way over wages. (~10% more) If we are really sliding into a recession, with the job losses and everything else, do you really think that you can get a +10-15% rise in rents as is being discussed in other threads? The easy increases have already been had, anymore and you seriously jeperdize demand. I know, as I just posted, my current place sat empty for 2 months until they dropped the increase and accepted our application.

[DWCAP]

esmith,
I dont really agree with all your numbers. They seem to optimistic.
First check the main page just below the latest entry. In the graph Rich graphs wages since 2001 and they are up maybe 18%, not 30%. I know you said 2000, but I dont think there was a huge jump in wages the year we started sliding into the last recession.
Second, this is a lower middle class area unless you are north of Calle Cristobal. Overall wages may be up ~18%, but the bottom half isnt feeling the good times. Remember the supposed jobless recovery of 2003-05? No jobs result in no wage growth. What wages/jobs growth their was for this segment of the population was in real estate, and over inflated as you said. It wont keep.
Third, it isnt like what wage growth was seen isnt being eaten away by gas, utilities, food and other inflation that is alot higher. To assume that people can contribute the same level of income to payments now as they could after the longest and most broadly felt boom in the last century is ignoring the realities of 3.50 gas.
Fourth, sure interest rates are 5.8%, for you. Most middle income people dont have $80000, let alone that in cash to invest. And those nice low interest rates you use are only for the best buyers. Most of us dont actually get that rate, especially from risk adverse banks demanding 20% down payments that the “buyers” just dont have.
People who can buy in carmel valley can easily buy in MM, but that doesnt mean that they want to live in MM.

Plus, something for FLU and all the rest to think about. In the same graph rich posted, rents are also tracked. They are up way over wages. (~10% more) If we are really sliding into a recession, with the job losses and everything else, do you really think that you can get a +10-15% rise in rents as is being discussed in other threads? The easy increases have already been had, anymore and you seriously jeperdize demand. I know, as I just posted, my current place sat empty for 2 months until they dropped the increase and accepted our application.

[DWCAP]

esmith,
I dont really agree with all your numbers. They seem to optimistic.
First check the main page just below the latest entry. In the graph Rich graphs wages since 2001 and they are up maybe 18%, not 30%. I know you said 2000, but I dont think there was a huge jump in wages the year we started sliding into the last recession.
Second, this is a lower middle class area unless you are north of Calle Cristobal. Overall wages may be up ~18%, but the bottom half isnt feeling the good times. Remember the supposed jobless recovery of 2003-05? No jobs result in no wage growth. What wages/jobs growth their was for this segment of the population was in real estate, and over inflated as you said. It wont keep.
Third, it isnt like what wage growth was seen isnt being eaten away by gas, utilities, food and other inflation that is alot higher. To assume that people can contribute the same level of income to payments now as they could after the longest and most broadly felt boom in the last century is ignoring the realities of 3.50 gas.
Fourth, sure interest rates are 5.8%, for you. Most middle income people dont have $80000, let alone that in cash to invest. And those nice low interest rates you use are only for the best buyers. Most of us dont actually get that rate, especially from risk adverse banks demanding 20% down payments that the “buyers” just dont have.
People who can buy in carmel valley can easily buy in MM, but that doesnt mean that they want to live in MM.

Plus, something for FLU and all the rest to think about. In the same graph rich posted, rents are also tracked. They are up way over wages. (~10% more) If we are really sliding into a recession, with the job losses and everything else, do you really think that you can get a +10-15% rise in rents as is being discussed in other threads? The easy increases have already been had, anymore and you seriously jeperdize demand. I know, as I just posted, my current place sat empty for 2 months until they dropped the increase and accepted our application.

[Author]

Posts