Now, the *numbers* tell the same story, but the graphs visually distort the appearance. If the income and population graphs were on a “0″ basis, the rise in population would seem more in line with your point.

Just a suggestion.

Finally a bailout that I can stand behind:

Unscrupulous lenders who deceptively sold subprime mortgages to millions of Americans should be fined and the proceeds used to help bail out borrowers facing a wave of foreclosures, according to Barack Obama, the Democratic senator running to be his party’s presidential candidate.

Full Article at Financial Times

If folks want a bailout then it only makes sense that those that caused this massive bubble should carry most of the financial repercussions. I know the industry is using “take responsibility for yourself moto” which is fine, because unfortuantely many people are and will be losing their homes through foreclosure. But what about those in the industry? Well if we were to let the system function without intervention, they would be dropping faster but this added liquidity is giving them some more breathing room. Where can buyers in trouble go in a credit crunch for $100,000?

It is the 2 standard system that is misguided. These companies are now asking for help because of their greed and lax underwriting standards. It seems like the Fed and some banks are willing to offer some corporate welfare. But those who bought at peak are out on the street if they miss their payments.

It’ll be interesting to see how they respond to a front running presidential candidate going directly after them.

I wouldn’t say the median rental rate is irrelevant. Like the article mentions, over 50 percent in the county rent. So the median rent does play a role. We can easily say the median home price in Los Angeles is also irrelevant but it clearly isn’t. With Los Angeles reaching a median of $547,500, there is such a drastic disconnect between rental prices and home prices. Like you mention, if you were to buy that $900,000 with 10 percent down, your monthly payment would be somewhere around $5,900 at current market rates for jumbo loans. Your rent is $1,960 and the PITI would be $5,900, or a difference of $3,940. This is no small number. I would imagine if they raised the rent on your place to $4,000 a month it may impact your lifestyle.

In your case, renting makes much more sense.

@john,

I don’t think the bubble was created on purpose per se. However, I do think an environment was setup where quick riches in real estate was supported by a credit bubble. The Fed Funds rate being dropped after 9/11 to stop the very brief recession we had. Lax lending standards. And like every other past bubble, the fuel of greed. All these things combined and gave us the massive housing bubble we are in.

Keep in mind that the bubble is regional. There are other parts of the country where real estate is still fairly priced. But like everything in life, our immediate environment becomes the entire world. Now if you live in SoCal, this reality is the epicenter of the housing bubble.

@megan,

I’m not sure what they are trying to say. Prices are currently going up but they don’t know how long it will last when the market equalizes? So they are basically saying that prices are inflated so don’t be shocked when your home is worth 20 or 30 percent less.

Thanks for clearing up that crucial point for Larry. Yes, the USA homeownership is at an all time record of approximately 70 percent thanks to lax lending standards. But LA County? Try digging into the Census number for yourself and you’ll find some interesting information.

The article clearly gives you an overview of key demographics, including homeownership rates for LA County.

As in ‘LA County’.