[kev374]

Check out the stat reported by this article:

http://www.dailynews.com/search/ci_5789169

The median-priced Valley home in this year’s first quarter is nearly four times more expensive than a decade ago.

That is a mindblowing statistic, median price was $158,000 in 1997, now it is $606,000!!!

[kev374]

Another catalyst is gas prices. The prices here just blow my mind $3.50/gallon for regular in Irvine. Compare that to $2.75/gallon/regular in Austin, Texas.

[kev374]

yikes! it’s the long haired freak again!!! That guy was on a show last month as well, he basically speaks nothing but nonsense. I’m wondering how someone like that can even get airtime..seesh!

Net incomes have gone up 10%/yr in the past 3 yrs? In that case I and everyone I know must be in the wrong jobs!

[kev374]

higher energy, food, healthcare leaves less to spend on housing so I can’t see housing prices increasing based on that..they should infact decrease.

The reason housing prices went up wildly was due to speculation and extremely loose lending. If you give financing to someone with no job, no credit and to top it all not require any downpayment they will not only take the loan but will outbid everyone else. What have they got to lose? Nothing! Money has no value to them because it’s credit and they didn’t earn it.

[kev374]

The downpayment is a HUGE factor in affordability. Realistically, the number of people who have even $30,000 saved up for a home is miniscule. Someone who has the rare discipline to save $1000/month will take 3 years to come up with this amount. That is a long time and doesn’t even take into account emergencies, job loss or the ever increasing cost of living coupled with stagnating income growth which makes saving money even more difficult as time goes by.

Currently 95% LTV maybe possible if you have a great credit score, but as the foreclosure mess unravels I doubt there will be anything more than 90% LTV. At current prices that would require a staggering $80,000 for downpayment and closing costs to bring to the table for a median home.

People with this kind of financial stability are rare among typical first time homebuyers (late 20s, early 30s).

Besides downpayment, what about reserves and emergency fund. If a homeowner doesn’t have reserves in addition to the downpayment they may quickly find themselves in trouble. That brings the total amount of savings to about $100,000. How many 30 yr olds do you know with 100k in the bank?

[kev374]

My guess is that it will revert to mean in terms of rents and income fundamentals. The mortgage payments should be similar to the rent payment and the median home should be about 3 times the median income. Right now that figure is around $240-300k or so depending on location in SoCal. I don’t advocate timing the market so exactly, if it’s within +/- 10% of sound fundamentals I will be in the market.

[kev374]

http://tlc.discovery.com/guides/property/my-first-home/my-first-home.html

[kev374]

Where’d you get $85,000 for median income? That seems high.

The stats for cities like Irvine, Lake Forest, Mission Viejo etc. are around $70-85k. I took the upper end just to be optimistic and give the best case scenario to account for some underreporting in income.

[kev374]

stickiness cannot be underestimated. Remember people will do what they can until they are forced to sell. They will stretch like crazy, sell stuff, beg, borrow to save their home. Most in the market are pre 2003 home buyers with good equity. These are not going to lower their prices significantly at all. You can see them reducing prices on their listings 5k at a time, yeah right, give me a break! These people love acting like their gains are a birthright.

Another culprit is ZIllow..they have such gross overestimations that it is not even funny. My Aunt’s condo in Las Vegas had a very recent comp for the price she paid for the place in 2003, yet per Zillow it’s 20% over that. Zillow seems to be ignoring comps and coming up with their own ridiculous valuations and of course some people are believing it. We all know that the Vegas market is tanking, yet the ZEstimate for this place keeps going up..up..up each month. Zillow is worthless!

[kev374]

For the most part, I thought HOA in Houston and Austin were cheap. $50/month typical and $200/month maximum. Some included trash. I consider $150/month in SD cheap

Well, what about the killer HOA in Irvine and Mission Viejo? Some of the condos are $300+! Insanity! On top of that they are charging $200-300/month Mello Roos. That is $600-700 just in fees. Then you have your astronomical property taxes.

[kev374]

Unfortunately most people are so brainwashed to think that buying a house is always the right thing to do that they will just about do anything which includes taking the suicide loans. Right now the value equation for buying a house is not only gone it’s totally blown out of the water any way you look at it!!!

[kev374]

That is one of the most ridiculous statements I have read in this blog.

Er..what is ridiculous? Most, and I mean almost all, people cannot recover from a $700,000 commitment that declines 20 or 30% in value, that’s being upside down $140,000-$200,000, especially when almost all first time buyers are going with zero down or even worse negative amortization.

Just because you claim to have the capacity to withstand several hundred thousands in capital losses without going under does not make a general case, kapicshe? Think about the broader context next time you counter instead of imagining that the world is only about yourself!

[kev374]

These arguments hold good in a balanced market (i.e. when owning and renting are similar costs), not in a completely irrational market that we’re currently in. If anyone buys now they are going to have a MASSIVE capital loss over the next couple of years and pretty much guarantee their financial ruin.

[kev374]

bottom line is these a-holes who are crying about their home need to accept the fact that they made a bad decision by not understanding or being indifferent to the terms of their loan. The consequence is to lose their home and move onto a rental where they belonged in the first place. These losers along with the politicians crying for their cause act like a home is their entitlement.

A lot of us can infact stretch and buy places but we choose to be judicious and careful. Those that have been reckless or indifferent should be accountable for those actions.

Losing a home is not the end of the world, they can move on to a rental instead of being arrogant jerks thinking they are entitled to special treatment.

Rewarding reckless behavior by a bailout is nothing short of an outrage.

[kev374]

Today on CNN:

Subprime Fix

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