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SD Squatter
11 years ago

Finally! Thank you Rich!
If

Finally! Thank you Rich!

If we also consider the interest rates, I would expect housing prices to be quite reasonable when compared to historical averages. Forthcoming monthly payments graphs will likely confirm that.

Adame99
11 years ago

I always thought that, for
I always thought that, for most people, the best indicators are the monthly payment ratios. However, I’ve recently started to wonder about that.

This is because I think that for most people in the house-buying cohort, their other monthly expenses have gone up quite quickly, leaving LESS available per month for house payments. Some of these other items include the following:

1. School costs (mainly college for their kids, plus student loan payments for themselves or their kids)
2. Health care costs (monthly premiums, copayments, etc, especially as employers try to push more of this onto employees)
3. Food/groceries costs
4. Gas costs
5. Planning for retirement costs (employers have been moving people from pensions to 401(k)’s as fast as possible, at greater costs to these people, especially how much they have to put into retirement savings to recover from the 2001-2002 and 2008-2009 market crashes)
6. Various taxes in the prime I-15 Corridor areas, such as Mello Roos, etc.

I think a case can be made that all the above costs have increased faster than wages since the inflation-adjusted wage peak in 1999/2000, leaving less available than before for house payments (including taxes, home insurance, etc). So yes, a house payment might seem historically reasonable due to lower interest rates. But I think families now would struggle more to make this “reasonable” house payment.

I think the 2004-2007 bubble obscured this deterioration in households’ payment abilities because houses became less a place to live and more and more an ATM machine to help people pay for increasingly expensive living conditions.

SD Squatter
11 years ago
Reply to  Adame99

Adame99 wrote:
I think the

[quote=Adame99]
I think the 2004-2007 bubble obscured this deterioration in households’ payment abilities because houses became less a place to live and more and more an ATM machine to help people pay for increasingly expensive living conditions.[/quote]

Example always comes down from our beloved leaders:

http://www.latintimes.com/articles/4354/20130523/antonio-villaraigosa-outgoing-los-angeles-mayor-broke-work-job.htm

moneymaker
11 years ago
Reply to  Adame99

Adame99 wrote:I always
[quote=Adame99]I always thought that, for most people, the best indicators are the monthly payment ratios. However, I’ve recently started to wonder about that.

This is because I think that for most people in the house-buying cohort, their other monthly expenses have gone up quite quickly, leaving LESS available per month for house payments. Some of these other items include the following:

1. School costs (mainly college for their kids, plus student loan payments for themselves or their kids)
2. Health care costs (monthly premiums, copayments, etc, especially as employers try to push more of this onto employees)
3. Food/groceries costs
4. Gas costs
5. Planning for retirement costs (employers have been moving people from pensions to 401(k)’s as fast as possible, at greater costs to these people, especially how much they have to put into retirement savings to recover from the 2001-2002 and 2008-2009 market crashes)
6. Various taxes in the prime I-15 Corridor areas, such as Mello Roos, etc.
[/quote]
I think a few were left out such as cable/internet, cell phones, water, and utility costs. Seems to me these are pretty pricey when added together and then added on top of a mortgage.

flyer
10 years ago
Reply to  moneymaker

Rich, and/or anyone else who
Rich, and/or anyone else who might care to comment:

We have friends who are planning to move to San Diego, but have no real “deadline” in mind. An acquaintance of theirs (mortgage broker) has told them that, in the next few years–specifically within the next two–San Diego housing prices may crash to the same lows we saw a few years ago–so they should wait to buy. (This, based upon the bubble territory and consequent volatility of the stock market, etc.)

We have a primary and rental property here, and, although I’m not a real estate professional, I haven’t read or heard any other predictions like this–in fact, I’ve read just the opposite–so I would really appreciate any thoughts you folks might have on this topic so I can pass the info along.