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December 17, 2008 at 8:29 AM in reply to: Fed empties the Armory, expends all ammo, housing has bottomed. SD RE will cost more in August of 09 than it does now. #317130December 17, 2008 at 8:29 AM in reply to: Fed empties the Armory, expends all ammo, housing has bottomed. SD RE will cost more in August of 09 than it does now. #317205
(former)FormerSanDiegan
Participant[quote=esmith]How about we stop panicking and try to do some level-headed analysis.
– What’s the median house price in San Diego county?
– Knowing that you can get a 5% 30-year fixed mortgage, what would be your total monthly payment if you bought a median house today? Let’s say 20% down. Include property tax and downpayment opportunity loss. You can use this source to check historical mortgage rates and CD rates:
http://research.stlouisfed.org/fred2/series/WCD6M?cid=121
http://research.stlouisfed.org/fred2/series/MORTG?cid=114– When was the last time houses were this cheap?
– What if we use inflation-adjusted dollars?[/quote]
I don’t know if we are at the bottom in pricing, but I have to agree with esmith on the point that housing is near generational lows in San Diego in terms of affordability, since it is obvious that houses are more affrdable than they have been in my adult lifetime (I’m in my mid-40’s).
My single-point Clairemont anecdote is illustrative, but there is further evidence.
Look at Rich’s chart in this article:
http://voiceofsandiego.org/articles/2008/12/17/toscano/780monthlypayments090408.txtThe article was written in September, with data from a couple months prior to that (Case-Shiller). At that time mortgage rates were around 6% and prices have dropped another 5 to 10%.
If you factor in rates dropping to ~ 5% and the further price decline, today we are at or near an all time low on that chart, which goes back to the late 1970’s.
So esmith is right, things are cheap by historical standards. They may get significantly cheaper, but we are definitely seeing historically low housing costs when measured by affordability metrics.
December 17, 2008 at 8:27 AM in reply to: Fed empties the Armory, expends all ammo, housing has bottomed. SD RE will cost more in August of 09 than it does now. #316711Participant[quote=4plexowner]
People who have $70K in the bank are not interested in buying a median home which at this point means a POS SFR in Clairemont or a condo/townhouse in some other “happening” part of town[/quote]
Interesting …
What’s funny about this is that SFRs in Clairemont have always roughly tracked the median price.
Also, the income required to buy these houses using traditional DTI ratios at the last housing bottom (circa 1996) was the equivalent of 1.5 times the median household income.
Today, a person with about 1.1x the median household income can buy a house in Clairemont.
Median household income : 60,900
CLairemont House : 375 K
Total PITI = 2039
(Loan @ 5.5%, 20% down : P&I = 1589; Taxes & interest : 450)Assuming PITI = 36% of income, Clairemont is affordable to someone making 1.1x the median household income.
December 17, 2008 at 8:27 AM in reply to: Fed empties the Armory, expends all ammo, housing has bottomed. SD RE will cost more in August of 09 than it does now. #317062Participant[quote=4plexowner]
People who have $70K in the bank are not interested in buying a median home which at this point means a POS SFR in Clairemont or a condo/townhouse in some other “happening” part of town[/quote]
Interesting …
What’s funny about this is that SFRs in Clairemont have always roughly tracked the median price.
Also, the income required to buy these houses using traditional DTI ratios at the last housing bottom (circa 1996) was the equivalent of 1.5 times the median household income.
Today, a person with about 1.1x the median household income can buy a house in Clairemont.
Median household income : 60,900
CLairemont House : 375 K
Total PITI = 2039
(Loan @ 5.5%, 20% down : P&I = 1589; Taxes & interest : 450)Assuming PITI = 36% of income, Clairemont is affordable to someone making 1.1x the median household income.
December 17, 2008 at 8:27 AM in reply to: Fed empties the Armory, expends all ammo, housing has bottomed. SD RE will cost more in August of 09 than it does now. #317103Participant[quote=4plexowner]
People who have $70K in the bank are not interested in buying a median home which at this point means a POS SFR in Clairemont or a condo/townhouse in some other “happening” part of town[/quote]
Interesting …
What’s funny about this is that SFRs in Clairemont have always roughly tracked the median price.
Also, the income required to buy these houses using traditional DTI ratios at the last housing bottom (circa 1996) was the equivalent of 1.5 times the median household income.
Today, a person with about 1.1x the median household income can buy a house in Clairemont.
Median household income : 60,900
CLairemont House : 375 K
Total PITI = 2039
(Loan @ 5.5%, 20% down : P&I = 1589; Taxes & interest : 450)Assuming PITI = 36% of income, Clairemont is affordable to someone making 1.1x the median household income.
December 17, 2008 at 8:27 AM in reply to: Fed empties the Armory, expends all ammo, housing has bottomed. SD RE will cost more in August of 09 than it does now. #317125Participant[quote=4plexowner]
People who have $70K in the bank are not interested in buying a median home which at this point means a POS SFR in Clairemont or a condo/townhouse in some other “happening” part of town[/quote]
Interesting …
What’s funny about this is that SFRs in Clairemont have always roughly tracked the median price.
Also, the income required to buy these houses using traditional DTI ratios at the last housing bottom (circa 1996) was the equivalent of 1.5 times the median household income.
Today, a person with about 1.1x the median household income can buy a house in Clairemont.
Median household income : 60,900
CLairemont House : 375 K
Total PITI = 2039
(Loan @ 5.5%, 20% down : P&I = 1589; Taxes & interest : 450)Assuming PITI = 36% of income, Clairemont is affordable to someone making 1.1x the median household income.
December 17, 2008 at 8:27 AM in reply to: Fed empties the Armory, expends all ammo, housing has bottomed. SD RE will cost more in August of 09 than it does now. #317199Participant[quote=4plexowner]
People who have $70K in the bank are not interested in buying a median home which at this point means a POS SFR in Clairemont or a condo/townhouse in some other “happening” part of town[/quote]
Interesting …
What’s funny about this is that SFRs in Clairemont have always roughly tracked the median price.
Also, the income required to buy these houses using traditional DTI ratios at the last housing bottom (circa 1996) was the equivalent of 1.5 times the median household income.
Today, a person with about 1.1x the median household income can buy a house in Clairemont.
Median household income : 60,900
CLairemont House : 375 K
Total PITI = 2039
(Loan @ 5.5%, 20% down : P&I = 1589; Taxes & interest : 450)Assuming PITI = 36% of income, Clairemont is affordable to someone making 1.1x the median household income.
Participantjpinpb – You are on the money with respect to Option ARMs. Increasing balance (negative amortization) kills. Those kinds of loans need cigarette label style warnings on them.
Participantjpinpb – You are on the money with respect to Option ARMs. Increasing balance (negative amortization) kills. Those kinds of loans need cigarette label style warnings on them.
Participantjpinpb – You are on the money with respect to Option ARMs. Increasing balance (negative amortization) kills. Those kinds of loans need cigarette label style warnings on them.
Participantjpinpb – You are on the money with respect to Option ARMs. Increasing balance (negative amortization) kills. Those kinds of loans need cigarette label style warnings on them.
Participantjpinpb – You are on the money with respect to Option ARMs. Increasing balance (negative amortization) kills. Those kinds of loans need cigarette label style warnings on them.
Participant[quote=JordanT]Your typical alt-A 5/1 ARM that originated in 2005 at 5.5- 5.75%, is tied to 12-month Libor with a margin of 2.25%.
Currently the 12-month LIBOR is under 2.5%.
5 years ago the 12-month LIBOR was at 1.4%. The loans resetting this month, reset to a higher interest rate until we get into loans that originated in June 2004 and later. For the next six months without the LIBOR going down, ARMS are going to reset higher. For 7/1 ARMS the 12-month LIBOR 7-years ago was 1.4% as well. The next two years of 7/1 ARMS saw the LIBOR at 1.4% meaning that there’s a very good chance they’ll reset higher as well, barring a drop in the LIBOR.[/quote]
You are incorrect. You seem to be confusing the start rate with the fully indexed rate. Loans originated in the Fall of 2003 when the 12-month LIBOR was in the 1.4% range had start rates of 5.5% with no points. I know this because I had such a loan.
Also, for the Jumbo loans in 2005 that I was looking into the start rate was 5.625% when the LIBOR was in the 4.25% range.
The start rate is often different than the fully indexed rate and tended to follow longer-term rates. The relationship between the start rate and fully indexed rates depends on the yield curve.
Participant[quote=JordanT]Your typical alt-A 5/1 ARM that originated in 2005 at 5.5- 5.75%, is tied to 12-month Libor with a margin of 2.25%.
Currently the 12-month LIBOR is under 2.5%.
5 years ago the 12-month LIBOR was at 1.4%. The loans resetting this month, reset to a higher interest rate until we get into loans that originated in June 2004 and later. For the next six months without the LIBOR going down, ARMS are going to reset higher. For 7/1 ARMS the 12-month LIBOR 7-years ago was 1.4% as well. The next two years of 7/1 ARMS saw the LIBOR at 1.4% meaning that there’s a very good chance they’ll reset higher as well, barring a drop in the LIBOR.[/quote]
You are incorrect. You seem to be confusing the start rate with the fully indexed rate. Loans originated in the Fall of 2003 when the 12-month LIBOR was in the 1.4% range had start rates of 5.5% with no points. I know this because I had such a loan.
Also, for the Jumbo loans in 2005 that I was looking into the start rate was 5.625% when the LIBOR was in the 4.25% range.
The start rate is often different than the fully indexed rate and tended to follow longer-term rates. The relationship between the start rate and fully indexed rates depends on the yield curve.
Participant[quote=JordanT]Your typical alt-A 5/1 ARM that originated in 2005 at 5.5- 5.75%, is tied to 12-month Libor with a margin of 2.25%.
Currently the 12-month LIBOR is under 2.5%.
5 years ago the 12-month LIBOR was at 1.4%. The loans resetting this month, reset to a higher interest rate until we get into loans that originated in June 2004 and later. For the next six months without the LIBOR going down, ARMS are going to reset higher. For 7/1 ARMS the 12-month LIBOR 7-years ago was 1.4% as well. The next two years of 7/1 ARMS saw the LIBOR at 1.4% meaning that there’s a very good chance they’ll reset higher as well, barring a drop in the LIBOR.[/quote]
You are incorrect. You seem to be confusing the start rate with the fully indexed rate. Loans originated in the Fall of 2003 when the 12-month LIBOR was in the 1.4% range had start rates of 5.5% with no points. I know this because I had such a loan.
Also, for the Jumbo loans in 2005 that I was looking into the start rate was 5.625% when the LIBOR was in the 4.25% range.
The start rate is often different than the fully indexed rate and tended to follow longer-term rates. The relationship between the start rate and fully indexed rates depends on the yield curve.
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