[stansd]

Of course higher interest rates will reduce affordability. That’s one of the key reasons we are all talking about 20%-50% reductions in housing prices from current levels.

Income remains a key determinant of affordability, increased interest rates not withstanding. The fundamentals don’t change, but changes in the fundamentals drive changes in values (previous post was in response to the idea that income based analysis was worthless).

Rates (and spreads) on jumbo and subprime loans will be higher than in the past couple years, but these products will remain part of the mortgage landscape the current lack of availability notwithstanding. Rates will go up, home prices will go down, but income (along with interest rate levels) will remain a key determinant of how low they go.

Stan

[stansd]

Of course higher interest rates will reduce affordability. That’s one of the key reasons we are all talking about 20%-50% reductions in housing prices from current levels.

Income remains a key determinant of affordability, increased interest rates not withstanding. The fundamentals don’t change, but changes in the fundamentals drive changes in values (previous post was in response to the idea that income based analysis was worthless).

Rates (and spreads) on jumbo and subprime loans will be higher than in the past couple years, but these products will remain part of the mortgage landscape the current lack of availability notwithstanding. Rates will go up, home prices will go down, but income (along with interest rate levels) will remain a key determinant of how low they go.

Stan

[stansd]

Bsharma,

Strongly disagree. Income is a key fundamental (limitations of the median notwithstanding)to housing valuation. The credit crunch is much more transitory-Credit will no doubt be tighter than in the past, but there will be an active and vibrant secondary market for loans…likely even those of the Jumbo or subprime variety at appropriate risk-reward valuations.

Listen to what you wrote: “The fundamentals have undergone a seismic shift.” Fundamentals don’t undergo seismic shifts, that’s why they are fundamentals.

Stan

[stansd]

Bsharma,

Strongly disagree. Income is a key fundamental (limitations of the median notwithstanding)to housing valuation. The credit crunch is much more transitory-Credit will no doubt be tighter than in the past, but there will be an active and vibrant secondary market for loans…likely even those of the Jumbo or subprime variety at appropriate risk-reward valuations.

Listen to what you wrote: “The fundamentals have undergone a seismic shift.” Fundamentals don’t undergo seismic shifts, that’s why they are fundamentals.

Stan

[stansd]

Bsharma,

Strongly disagree. Income is a key fundamental (limitations of the median notwithstanding)to housing valuation. The credit crunch is much more transitory-Credit will no doubt be tighter than in the past, but there will be an active and vibrant secondary market for loans…likely even those of the Jumbo or subprime variety at appropriate risk-reward valuations.

Listen to what you wrote: “The fundamentals have undergone a seismic shift.” Fundamentals don’t undergo seismic shifts, that’s why they are fundamentals.

Stan

[stansd]

I’m thinking purely of the income it takes to support the mortgage, not any psychological factors (behavioral factors may swing with the winds of popular opinion, but the fundamentals are the fundamentals). As long as rates stay below 8-9% (which I think they will), 100K will support a 350K house.

If rates go higher, that means we have inflation and we won’t need the same kind of nominal declines to get back to normalcy.

Stan

[stansd]

I’m thinking purely of the income it takes to support the mortgage, not any psychological factors (behavioral factors may swing with the winds of popular opinion, but the fundamentals are the fundamentals). As long as rates stay below 8-9% (which I think they will), 100K will support a 350K house.

If rates go higher, that means we have inflation and we won’t need the same kind of nominal declines to get back to normalcy.

Stan

[stansd]

I’m thinking purely of the income it takes to support the mortgage, not any psychological factors (behavioral factors may swing with the winds of popular opinion, but the fundamentals are the fundamentals). As long as rates stay below 8-9% (which I think they will), 100K will support a 350K house.

If rates go higher, that means we have inflation and we won’t need the same kind of nominal declines to get back to normalcy.

Stan

[stansd]

I had the same thought…how much overhead is involved in getting into the thing…I’d have a blast just watching.

Stan

[stansd]

I had the same thought…how much overhead is involved in getting into the thing…I’d have a blast just watching.

Stan

[stansd]

I had the same thought…how much overhead is involved in getting into the thing…I’d have a blast just watching.

Stan

[stansd]

I think most of the feedback here reflects the bias of this board. I’m a big housing bear, but I just can’t see 50% declines. That would put the house I am in at 250K versus a peak value of 550K (currently worth 500K).

Lets talk fundamentals…Lot of focus around on the median income…There are a lot of DINK’s and wealthy individuals in this city. I don’t recall the percentages of owners or renters in the area, but lets say it’s 50% and median income is 50K…that would imply that the median income of a housing owner in SD is probably nearing 100K. I live in RB where 90% are owners and median income is near 100K(median excluding renters is probably 120K).

At 100K, you can easily support the mortgage on a 350K house. I don’t see the decline going beyond 30% from today, and I think 20% is more likely.

If it hits 50%, unemployment will be above 10%, and we’ll all have big issues to worry about….yes, that’s only ’02 or ’03 prices.

Stan

[stansd]

I think most of the feedback here reflects the bias of this board. I’m a big housing bear, but I just can’t see 50% declines. That would put the house I am in at 250K versus a peak value of 550K (currently worth 500K).

Lets talk fundamentals…Lot of focus around on the median income…There are a lot of DINK’s and wealthy individuals in this city. I don’t recall the percentages of owners or renters in the area, but lets say it’s 50% and median income is 50K…that would imply that the median income of a housing owner in SD is probably nearing 100K. I live in RB where 90% are owners and median income is near 100K(median excluding renters is probably 120K).

At 100K, you can easily support the mortgage on a 350K house. I don’t see the decline going beyond 30% from today, and I think 20% is more likely.

If it hits 50%, unemployment will be above 10%, and we’ll all have big issues to worry about….yes, that’s only ’02 or ’03 prices.

Stan

[stansd]

I think most of the feedback here reflects the bias of this board. I’m a big housing bear, but I just can’t see 50% declines. That would put the house I am in at 250K versus a peak value of 550K (currently worth 500K).

Lets talk fundamentals…Lot of focus around on the median income…There are a lot of DINK’s and wealthy individuals in this city. I don’t recall the percentages of owners or renters in the area, but lets say it’s 50% and median income is 50K…that would imply that the median income of a housing owner in SD is probably nearing 100K. I live in RB where 90% are owners and median income is near 100K(median excluding renters is probably 120K).

At 100K, you can easily support the mortgage on a 350K house. I don’t see the decline going beyond 30% from today, and I think 20% is more likely.

If it hits 50%, unemployment will be above 10%, and we’ll all have big issues to worry about….yes, that’s only ’02 or ’03 prices.

Stan

[stansd]

It must all be a vast right wing conspiracy…this guy is ridiculous…As long as housing in CA is desirable, there will be a shortage…what makes the current market amazing is that prices have gone beyond what is necessary to balance supply and demand even in an environment of scarcity.

The only conclusion you can draw from his nonsense is that we should all wish for prices to remain sky high so that builders will build more so that more people can continue to consume their future financial security now in order to afford a 3BR 500K bungalow in Bonsall.

Stan

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