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(former)FormerSanDiegan
ParticipantFirst of all, I don’t think there is anything to justify a permanently higher plateau. But I do have a couple observations.
1. Like the tax changes in the 70’s mentioned above there was a significant tax change in 1997 for personal residences. The change is the capital gains tax exclusion on the first 250K (or 500K if married) on the sale of a primary residence.
Over the long term, this could effectively makes a primary residence a little more attractive over the long run, if everything else were equal. I would expect this to raise the ratio slightly (maybe by 5 or 10%) not the 60% increase shown.2. The ratio of an asset price compared to income or rent derived from it can be interest-rate sensitive. For example, one might be happy to pay $100,000 to buy a property that rents at say $1000 per month when bonds or alternative investments are in the 5% range. However, if alternative investments are paying 15%, it doesn’t look so hot. After a long-period of declining interest rates from early 1980s until now I would expect some upward bias in the valuation on your chart. Going forward, I think the trend will at best be flat rates and perhaps significantly higher rates, so this would not help the higher plateau theory.
ParticipantJWM in SD –
I don’t understand your comments … One could have a high LTV loan in which the payment is 28% or so of one’s income and qualify based on traditional lending standards. Fast-forward a few years when prices come down in line with incomes.
Do you not think that at some point in the next few years that housing prices will revert to being somewhat affordable ?ParticipantJWM in SD –
I don’t understand your comments … One could have a high LTV loan in which the payment is 28% or so of one’s income and qualify based on traditional lending standards. Fast-forward a few years when prices come down in line with incomes.
Do you not think that at some point in the next few years that housing prices will revert to being somewhat affordable ?ParticipantJWM in SD –
I don’t understand your comments … One could have a high LTV loan in which the payment is 28% or so of one’s income and qualify based on traditional lending standards. Fast-forward a few years when prices come down in line with incomes.
Do you not think that at some point in the next few years that housing prices will revert to being somewhat affordable ?ParticipantJWM in SD –
I don’t understand your comments … One could have a high LTV loan in which the payment is 28% or so of one’s income and qualify based on traditional lending standards. Fast-forward a few years when prices come down in line with incomes.
Do you not think that at some point in the next few years that housing prices will revert to being somewhat affordable ?ParticipantJWM in SD –
I don’t understand your comments … One could have a high LTV loan in which the payment is 28% or so of one’s income and qualify based on traditional lending standards. Fast-forward a few years when prices come down in line with incomes.
Do you not think that at some point in the next few years that housing prices will revert to being somewhat affordable ?ParticipantSo let me get this straight, you are now advocating the use of high ltv loans as affordibility products again???? Is that not what got the market into the mess it is right now?
Actually, these products were available in the mid-90’s bottom as well. It was not unusual for first-time buyers to purchase with 5% down. It simply required full documentation, conservative debt ratios and payment of PMI. That’s what I did.
It was not high LTV products that caused the problem. It was the complete disregard to assessing risk and requiring documentation of income and assets.
I believe that for many first-time buyers, that sometime in the next 2, 3 or 4 years it will make perfect sense again for them to purchase with 5% down, assuming conservative DTI ratios and real jobs.
ParticipantSo let me get this straight, you are now advocating the use of high ltv loans as affordibility products again???? Is that not what got the market into the mess it is right now?
Actually, these products were available in the mid-90’s bottom as well. It was not unusual for first-time buyers to purchase with 5% down. It simply required full documentation, conservative debt ratios and payment of PMI. That’s what I did.
It was not high LTV products that caused the problem. It was the complete disregard to assessing risk and requiring documentation of income and assets.
I believe that for many first-time buyers, that sometime in the next 2, 3 or 4 years it will make perfect sense again for them to purchase with 5% down, assuming conservative DTI ratios and real jobs.
ParticipantSo let me get this straight, you are now advocating the use of high ltv loans as affordibility products again???? Is that not what got the market into the mess it is right now?
Actually, these products were available in the mid-90’s bottom as well. It was not unusual for first-time buyers to purchase with 5% down. It simply required full documentation, conservative debt ratios and payment of PMI. That’s what I did.
It was not high LTV products that caused the problem. It was the complete disregard to assessing risk and requiring documentation of income and assets.
I believe that for many first-time buyers, that sometime in the next 2, 3 or 4 years it will make perfect sense again for them to purchase with 5% down, assuming conservative DTI ratios and real jobs.
ParticipantSo let me get this straight, you are now advocating the use of high ltv loans as affordibility products again???? Is that not what got the market into the mess it is right now?
Actually, these products were available in the mid-90’s bottom as well. It was not unusual for first-time buyers to purchase with 5% down. It simply required full documentation, conservative debt ratios and payment of PMI. That’s what I did.
It was not high LTV products that caused the problem. It was the complete disregard to assessing risk and requiring documentation of income and assets.
I believe that for many first-time buyers, that sometime in the next 2, 3 or 4 years it will make perfect sense again for them to purchase with 5% down, assuming conservative DTI ratios and real jobs.
ParticipantSo let me get this straight, you are now advocating the use of high ltv loans as affordibility products again???? Is that not what got the market into the mess it is right now?
Actually, these products were available in the mid-90’s bottom as well. It was not unusual for first-time buyers to purchase with 5% down. It simply required full documentation, conservative debt ratios and payment of PMI. That’s what I did.
It was not high LTV products that caused the problem. It was the complete disregard to assessing risk and requiring documentation of income and assets.
I believe that for many first-time buyers, that sometime in the next 2, 3 or 4 years it will make perfect sense again for them to purchase with 5% down, assuming conservative DTI ratios and real jobs.
ParticipantAccording to the census bureau about 25.5% of San Diego households had income that exceeds 100K. Nearly 11% of households have incomes exceeding 150K.
With the median price in the 450K range or so, I believe that the number of households who can afford the median house must be somewhere between 12-15%, assuming conservative DTIs.
The pseudo stat 3% number thrown around above is off by at least a factor of 4.
ParticipantAccording to the census bureau about 25.5% of San Diego households had income that exceeds 100K. Nearly 11% of households have incomes exceeding 150K.
With the median price in the 450K range or so, I believe that the number of households who can afford the median house must be somewhere between 12-15%, assuming conservative DTIs.
The pseudo stat 3% number thrown around above is off by at least a factor of 4.
ParticipantAccording to the census bureau about 25.5% of San Diego households had income that exceeds 100K. Nearly 11% of households have incomes exceeding 150K.
With the median price in the 450K range or so, I believe that the number of households who can afford the median house must be somewhere between 12-15%, assuming conservative DTIs.
The pseudo stat 3% number thrown around above is off by at least a factor of 4.
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