[SDEngineer]

“Given that the median income in this county is less than $100K, what is the median house price again?”

This is true, but misleading – the numbers are a bit off, and median household income never buys a median house. The lower income tiers, whether by being unskilled, or young and at the bottom rung of their careers, don’t buy houses, they rent – even now, after the age of easy money, in Southern California as many households rent as own (it’s very close to a perfect 50/50 split). This is less true in other areas that have significantly higher homeownership like the midwest, but out here costs have always been high enough that there have been a great many renters. There was a post on here not too long ago that linked to a site that had the breakout of median household renters income in San Diego (don’t remember the site, but it was in one of the posts or articles on this site. IIRC, it was about 43K), and after backing that out of the figure they used for overall median household income (of all types, 72K), the number for median homeowners household income worked out to about 95K.

The take home figure for 100K is also a bit light – it should be a bit higher than 6k/mo take home. At those numbers, and assuming a median household income of 100K buying that median home, it still works out to better than 40% of their net (though it’s down to an approvable 28% of their gross). *EDIT* oops, just noticed that the OP had reduced the gross by using a full 15% to 401K. Certainly a smart thing to do, but I doubt most households do that, nor do I think it’s really necessary unless they started late on their retirement savings. Others will have decent matching also reducing the %(in my case, I get 6% matching, and am putting only 6% of my own dollars towards the 401K).

It’s not nearly as overpriced or unaffordable as it used to be (though it’s still well above historical norms for this area). Of course, prices are still going to fall, but I think it’s more now driven by factors other than that people simply can’t afford a home (ie. it’s still significantly cheaper to rent an equivalent home, and a great many can’t get financed in the current credit crunch, and of course, there’s still tons of foreclosures going to hit the market from people who did buy well above their means during the bubble using “creative” financing products).

[SDEngineer]

“Oh, it’s a stick. I can’t imagine ever driving an automatic, and certainly not the TT. Do they make a TT that’s automatic? That should be criminal.”

You’d be surprised – the new manumatic types of transmissions that are appearing on the sporty cars are a lot better than they used to be. I was a manual snob until recently (I had had automatics before, and couldn’t stand them), but my wife refuses to learn to drive a stick, and I had resigned myself to getting an automatic so that she could take the “fun car” from time to time.

Got a Infiniti G37 with their automatic, and it really changed my opinion. I can drive it just like a manual using the paddle shifters – the tranny never overrules me (I can even hit the rev limiter if I’m not paying attention), and the tranny even *blips* the throttle to maintain engine revs in the sweet spot (and get rid of shift-shock) when shifting as if it were heel and toeing. And the wife can stick it in “D” and still have fun (the shift points and responsiveness are very good even when not driving it in manumatic mode).

[SDEngineer]

“Oh, it’s a stick. I can’t imagine ever driving an automatic, and certainly not the TT. Do they make a TT that’s automatic? That should be criminal.”

You’d be surprised – the new manumatic types of transmissions that are appearing on the sporty cars are a lot better than they used to be. I was a manual snob until recently (I had had automatics before, and couldn’t stand them), but my wife refuses to learn to drive a stick, and I had resigned myself to getting an automatic so that she could take the “fun car” from time to time.

Got a Infiniti G37 with their automatic, and it really changed my opinion. I can drive it just like a manual using the paddle shifters – the tranny never overrules me (I can even hit the rev limiter if I’m not paying attention), and the tranny even *blips* the throttle to maintain engine revs in the sweet spot (and get rid of shift-shock) when shifting as if it were heel and toeing. And the wife can stick it in “D” and still have fun (the shift points and responsiveness are very good even when not driving it in manumatic mode).

[SDEngineer]

“Oh, it’s a stick. I can’t imagine ever driving an automatic, and certainly not the TT. Do they make a TT that’s automatic? That should be criminal.”

You’d be surprised – the new manumatic types of transmissions that are appearing on the sporty cars are a lot better than they used to be. I was a manual snob until recently (I had had automatics before, and couldn’t stand them), but my wife refuses to learn to drive a stick, and I had resigned myself to getting an automatic so that she could take the “fun car” from time to time.

Got a Infiniti G37 with their automatic, and it really changed my opinion. I can drive it just like a manual using the paddle shifters – the tranny never overrules me (I can even hit the rev limiter if I’m not paying attention), and the tranny even *blips* the throttle to maintain engine revs in the sweet spot (and get rid of shift-shock) when shifting as if it were heel and toeing. And the wife can stick it in “D” and still have fun (the shift points and responsiveness are very good even when not driving it in manumatic mode).

[SDEngineer]

“Oh, it’s a stick. I can’t imagine ever driving an automatic, and certainly not the TT. Do they make a TT that’s automatic? That should be criminal.”

You’d be surprised – the new manumatic types of transmissions that are appearing on the sporty cars are a lot better than they used to be. I was a manual snob until recently (I had had automatics before, and couldn’t stand them), but my wife refuses to learn to drive a stick, and I had resigned myself to getting an automatic so that she could take the “fun car” from time to time.

Got a Infiniti G37 with their automatic, and it really changed my opinion. I can drive it just like a manual using the paddle shifters – the tranny never overrules me (I can even hit the rev limiter if I’m not paying attention), and the tranny even *blips* the throttle to maintain engine revs in the sweet spot (and get rid of shift-shock) when shifting as if it were heel and toeing. And the wife can stick it in “D” and still have fun (the shift points and responsiveness are very good even when not driving it in manumatic mode).

[SDEngineer]

“Oh, it’s a stick. I can’t imagine ever driving an automatic, and certainly not the TT. Do they make a TT that’s automatic? That should be criminal.”

You’d be surprised – the new manumatic types of transmissions that are appearing on the sporty cars are a lot better than they used to be. I was a manual snob until recently (I had had automatics before, and couldn’t stand them), but my wife refuses to learn to drive a stick, and I had resigned myself to getting an automatic so that she could take the “fun car” from time to time.

Got a Infiniti G37 with their automatic, and it really changed my opinion. I can drive it just like a manual using the paddle shifters – the tranny never overrules me (I can even hit the rev limiter if I’m not paying attention), and the tranny even *blips* the throttle to maintain engine revs in the sweet spot (and get rid of shift-shock) when shifting as if it were heel and toeing. And the wife can stick it in “D” and still have fun (the shift points and responsiveness are very good even when not driving it in manumatic mode).

[SDEngineer]

Nesposito:

Some bubble areas were more bubbly than others, but the nation as a whole has experienced this housing bubble.

San Diego is no different from the other inflated cities, all of which are dropping at this point. New York didn’t have as much of a bubble to begin with (very high salaries had always supported a very high median home price in the city), but even so, their prices are also now dropping. The SF Bay area is also dropping like a rock right now, just not quite as much of a rock as San Diego, Phoenix, Miami, and Las Vegas, which is why those cities are getting the majority of the press.

San Diego did hit the hyperinflation phase of the bubble about a year earlier than most of the other cities, and we also topped out earlier, but at this point, the Case-Shiller indexes (and the other indexes) now have pretty much all of the bubble cities in free-fall with regards to prices.

[SDEngineer]

Nesposito:

Some bubble areas were more bubbly than others, but the nation as a whole has experienced this housing bubble.

San Diego is no different from the other inflated cities, all of which are dropping at this point. New York didn’t have as much of a bubble to begin with (very high salaries had always supported a very high median home price in the city), but even so, their prices are also now dropping. The SF Bay area is also dropping like a rock right now, just not quite as much of a rock as San Diego, Phoenix, Miami, and Las Vegas, which is why those cities are getting the majority of the press.

San Diego did hit the hyperinflation phase of the bubble about a year earlier than most of the other cities, and we also topped out earlier, but at this point, the Case-Shiller indexes (and the other indexes) now have pretty much all of the bubble cities in free-fall with regards to prices.

[SDEngineer]

Nesposito:

Some bubble areas were more bubbly than others, but the nation as a whole has experienced this housing bubble.

San Diego is no different from the other inflated cities, all of which are dropping at this point. New York didn’t have as much of a bubble to begin with (very high salaries had always supported a very high median home price in the city), but even so, their prices are also now dropping. The SF Bay area is also dropping like a rock right now, just not quite as much of a rock as San Diego, Phoenix, Miami, and Las Vegas, which is why those cities are getting the majority of the press.

San Diego did hit the hyperinflation phase of the bubble about a year earlier than most of the other cities, and we also topped out earlier, but at this point, the Case-Shiller indexes (and the other indexes) now have pretty much all of the bubble cities in free-fall with regards to prices.

[SDEngineer]

Nesposito:

Some bubble areas were more bubbly than others, but the nation as a whole has experienced this housing bubble.

San Diego is no different from the other inflated cities, all of which are dropping at this point. New York didn’t have as much of a bubble to begin with (very high salaries had always supported a very high median home price in the city), but even so, their prices are also now dropping. The SF Bay area is also dropping like a rock right now, just not quite as much of a rock as San Diego, Phoenix, Miami, and Las Vegas, which is why those cities are getting the majority of the press.

San Diego did hit the hyperinflation phase of the bubble about a year earlier than most of the other cities, and we also topped out earlier, but at this point, the Case-Shiller indexes (and the other indexes) now have pretty much all of the bubble cities in free-fall with regards to prices.

[SDEngineer]

Nesposito:

Some bubble areas were more bubbly than others, but the nation as a whole has experienced this housing bubble.

San Diego is no different from the other inflated cities, all of which are dropping at this point. New York didn’t have as much of a bubble to begin with (very high salaries had always supported a very high median home price in the city), but even so, their prices are also now dropping. The SF Bay area is also dropping like a rock right now, just not quite as much of a rock as San Diego, Phoenix, Miami, and Las Vegas, which is why those cities are getting the majority of the press.

San Diego did hit the hyperinflation phase of the bubble about a year earlier than most of the other cities, and we also topped out earlier, but at this point, the Case-Shiller indexes (and the other indexes) now have pretty much all of the bubble cities in free-fall with regards to prices.

[SDEngineer]

JP:

I certainly wasn’t trying to question the Case-Shiller numbers, they’re one of the tools I’ve been using to attempt to figure the market out. They certainly do indicate the higher value areas were in a BIG bubble – just not nearly as much of a bubble as the lower value areas.

Rich Toscano’s charts which he posts here are very eye-opening. See here:

January Case-Shiller HPI

for one of his recent posts after the release of the January Case-Shiller numbers (bear in mind, we’ve seen another 3 months of depreciation since then). You can see that the high areas never got quite as overvalued as the lower areas, and haven’t fallen nearly as much from peak as them at this point – but there’s no indication that they won’t fall, just that they didn’t have as far to fall to begin with, and presumably had less subprimes to worry about along with owners with greater personal means to postpone financial problems. You’ll note that according to Rich’s charts, the low end areas have experienced the brunt of the depreciation so far, but the high and mid areas are still overpriced and will presumably revert to medians soon – and now all three groupings have roughly as far to fall to return to parity.

BTW, I think “normal” appreciation over a 8 year period would be somewhere around 30-40%. Housing generally tracks real inflation pretty accurately (though our recent inflation numbers are badly understated as a result of changes to the calculations they made in the late 90’s which have resulted in essentially ignoring a lot of energy and food inflation).

[SDEngineer]

JP:

I certainly wasn’t trying to question the Case-Shiller numbers, they’re one of the tools I’ve been using to attempt to figure the market out. They certainly do indicate the higher value areas were in a BIG bubble – just not nearly as much of a bubble as the lower value areas.

Rich Toscano’s charts which he posts here are very eye-opening. See here:

January Case-Shiller HPI

for one of his recent posts after the release of the January Case-Shiller numbers (bear in mind, we’ve seen another 3 months of depreciation since then). You can see that the high areas never got quite as overvalued as the lower areas, and haven’t fallen nearly as much from peak as them at this point – but there’s no indication that they won’t fall, just that they didn’t have as far to fall to begin with, and presumably had less subprimes to worry about along with owners with greater personal means to postpone financial problems. You’ll note that according to Rich’s charts, the low end areas have experienced the brunt of the depreciation so far, but the high and mid areas are still overpriced and will presumably revert to medians soon – and now all three groupings have roughly as far to fall to return to parity.

BTW, I think “normal” appreciation over a 8 year period would be somewhere around 30-40%. Housing generally tracks real inflation pretty accurately (though our recent inflation numbers are badly understated as a result of changes to the calculations they made in the late 90’s which have resulted in essentially ignoring a lot of energy and food inflation).

[SDEngineer]

JP:

I certainly wasn’t trying to question the Case-Shiller numbers, they’re one of the tools I’ve been using to attempt to figure the market out. They certainly do indicate the higher value areas were in a BIG bubble – just not nearly as much of a bubble as the lower value areas.

Rich Toscano’s charts which he posts here are very eye-opening. See here:

January Case-Shiller HPI

for one of his recent posts after the release of the January Case-Shiller numbers (bear in mind, we’ve seen another 3 months of depreciation since then). You can see that the high areas never got quite as overvalued as the lower areas, and haven’t fallen nearly as much from peak as them at this point – but there’s no indication that they won’t fall, just that they didn’t have as far to fall to begin with, and presumably had less subprimes to worry about along with owners with greater personal means to postpone financial problems. You’ll note that according to Rich’s charts, the low end areas have experienced the brunt of the depreciation so far, but the high and mid areas are still overpriced and will presumably revert to medians soon – and now all three groupings have roughly as far to fall to return to parity.

BTW, I think “normal” appreciation over a 8 year period would be somewhere around 30-40%. Housing generally tracks real inflation pretty accurately (though our recent inflation numbers are badly understated as a result of changes to the calculations they made in the late 90’s which have resulted in essentially ignoring a lot of energy and food inflation).

[SDEngineer]

JP:

I certainly wasn’t trying to question the Case-Shiller numbers, they’re one of the tools I’ve been using to attempt to figure the market out. They certainly do indicate the higher value areas were in a BIG bubble – just not nearly as much of a bubble as the lower value areas.

Rich Toscano’s charts which he posts here are very eye-opening. See here:

January Case-Shiller HPI

for one of his recent posts after the release of the January Case-Shiller numbers (bear in mind, we’ve seen another 3 months of depreciation since then). You can see that the high areas never got quite as overvalued as the lower areas, and haven’t fallen nearly as much from peak as them at this point – but there’s no indication that they won’t fall, just that they didn’t have as far to fall to begin with, and presumably had less subprimes to worry about along with owners with greater personal means to postpone financial problems. You’ll note that according to Rich’s charts, the low end areas have experienced the brunt of the depreciation so far, but the high and mid areas are still overpriced and will presumably revert to medians soon – and now all three groupings have roughly as far to fall to return to parity.

BTW, I think “normal” appreciation over a 8 year period would be somewhere around 30-40%. Housing generally tracks real inflation pretty accurately (though our recent inflation numbers are badly understated as a result of changes to the calculations they made in the late 90’s which have resulted in essentially ignoring a lot of energy and food inflation).

[Author]

Posts