Comments on: The Miseducation of the California Housing Market: 3 Reasons Why California Housing Still Has 3 Years Before Hitting a Bottom.

By: renter

renter — Tue, 05 Jan 2010 21:25:18 +0000

Great analysis. I live in OC and opted not to be a causality in 2004. I simply couldn’t make the numbers work like the lender was telling me they would. They encouraged, “just eat PB&J, it’s ok if you don’t have furniture, get a roommate”, etc. But no matter how I added it up, I didn’t see the mortgage, property taxes, HOA, as supportable if something should happen to my job. Everyone, the media was saying “buy before you miss out”. I was looking at “homes” (apts really) at $440,000-635,000) Thank God I heeded the facts and since then I have been laid off twice. Still renting in 2010 but not bankrupt or homeless. It’s not enough now to have the money to buy, you have to –whether or not you buy a house– have savings to live knowing your job most likely will not last or be subject to furlough. Something my parents never had to consider. They had their job as long as they wanted and retired from it and paid off their house way before then. Thanks for part 1 of my savings plan for 2013!

By: FYI

FYI — Fri, 27 Nov 2009 20:41:50 +0000

Development of new inclusive Chart/Graph (using your existing graph/chart above as the basis for much of it).

An “all-on-one” median housing price; median home price to median income ratio; median family income; graph could be developed as follows if the remaining data can be obtained (and graphed).

The chart would have an x-axis (time) displaying the years 1970 to 2009 (better 2010) at a minimum. (If data are available, the earliest year could be 1965 or before).

The left-hand side vertical axis would run from $0 to $600,000 (dollars).

The right-hand side vertical axis would run from 0 to 10 (or 11-12 as necessary) to display the median home price/median family income ratios for the years 1970-2009.

The missing data needed are:
Median family income for the U.S. and California over the years 1970-2009 (non-inflation adjusted).
Median home price/median family income ratios for California for the years 1970-2009.

The other graph/data are contained in the item below.

US Existing House Price / Median Family Income By Barry Ritholtz – February 20th, 2009
http://www.ritholtz.com/blog/2009/02/us-existing-house-price-median-family-income/
‘U.S. Existing House Price (Case-Shiller)
div by Median Family Income (1965-2009)’

By: Surviving A Recession

Surviving A Recession — Tue, 24 Feb 2009 21:19:36 +0000

Wow a really fantastic article. Great analysis. I think real estate is way over priced. And, until home prices equalize with the reality of true income prices will continue to slide. All this talk, by the pundits, about supporting home prices is self defeating. If incomes do not support the price then no one will buy.

I think we have a long way to go in a lot more markets than just California.

Beau

By: EarlT

EarlT — Mon, 12 Jan 2009 05:16:13 +0000

Blame Congress

Every house sold since 2000
when Congress Pressured
Fannie Mae and Freddie Mac
to relax Lending criteria,
that caused resulted in Mortgage lenders
loaning on 600k houses
to people that could afford only
200k houses.

In 2000 median Calif house 180k
In 2005 median Calif house 600k

So what will happen is:
House prices should Drop to 180k
back to normal lending practice,
but due to Foreclosures
and the Law of Supply and Demand,
Prices should drop to @ 20% below 180k
then factoring in the Economic Crisis,
Median prices should drop another 20% to 120k.
This estimate is Conservative.

That is Median price not low end.

Think Not?

Average 2008 Detroit house price only 20k.

http://mjperry.blogspot.com/2008/06/average-sale-price-of-house-in-detroit.html

By: leroi

leroi — Sat, 22 Nov 2008 04:01:41 +0000

I totally agree with bc. When I moved to San Diego two years ago I had the same feeling. It just didn’t make sense that I was not even close to being able to afford a basic home here, despite having a good engineering job and working spouse. We’d drive through the suburbs wondering who could afford all of these houses. I guess now I have my answer … not many folks really could.

By: bc

bc — Fri, 07 Nov 2008 23:20:30 +0000

I moved from Nor Cal to LA. I feel like I overpaid in 2002 for my NEW 1475 sqft home of $230k in Nor Cal. It went up to $450!!….now back to $280. Now in LA, they want me to pay $450k for a 25 yr old 1000 sqft apt turned condo with HOA of $250/month and no garage and termites. I decided to rent for $2000 instead. Somehow, I still feel like I’m getting ripped off. I’m an engineer and I can’t afford a crappy home? Something is wrong.

By: Peufeu

Peufeu — Fri, 07 Nov 2008 06:32:44 +0000

WHOA ! Look at those home loans rates !

The bubble’s main cause is cheap credit + idiotic “smart growth” policies restricting homebuilding and adding long building permit delays in the feedback loop between demand and offer.

By: Ted

Ted — Wed, 05 Nov 2008 23:56:52 +0000

I’m continually wondering why the analyses of where the home market will bottom out always starts with the high point in 2005-06 and estimate down. Seems like going to a car dealer and negotiating from the sticker price. Rather, why not look at median home prices in 1999-2000 and simply figure a 4.5-5% annual rate of increase to 2008. That equates to about 45-50% increase over the 2000 price – analogous to starting with the dealer’s cost and negotiating up!

By: Jackson

Jackson — Wed, 05 Nov 2008 11:52:06 +0000

All I can say growing up in California is that none of that real estate plagued with fires, earthquakes, unrest, and pollution is worth anything near what it is at today. This was simple unchecked greed that has come back to haunt them. Santa Monica where I grew up is grossly overrated. It is dirty, crowed, and now polluted. I will not touch the reality of that one horse pit stop called Malibu. It is so overrated but the world has been led to believe it is something it isn’t – just like Hollywood. A fool and his money are soon parted, bye! bye! or as the LA crackpots who love to pretend they are something they aren’t say TTFN – Ta Ta For Now

By: William

William — Wed, 05 Nov 2008 09:45:07 +0000

Thanks for the informative article! I’ve been watching home prices and you hit it on the nail with 2011 being the earliest, i personally think it’ll take till 2014 or so and stay flat there for a few years. There’s a site that I’ve been using to track and the prices in California seems to be going down weekly!

http://www.homepricetrend.com