Comments on: Foreclose the Dream: Record Breaking Foreclosures in 2008. California Foreclosures Rise Like a Phoenix now that Weak Foreclosure Legislation is Catching up.

By: ed

ed — Tue, 20 Jan 2009 22:10:20 +0000

hi, in your link to 10 reasons california wont see a bottom, you stated that the median household income is $53,770. however, in this blog post, you mention the median ‘family’ income is $59,948. what’s the diff between family and household income? and if they are the same, does that mean households are earning 6K more than they have 5 months ago?

By: Perry

Perry — Tue, 20 Jan 2009 09:35:06 +0000

I completely agree with the fact that the price to income ratio in Southern California is still high despite the recent price correction. I think we still have more to go since the income does not correspond to the price of homes. I am not sure how long will the correction last, but one thing for sure is we will have another correction this year for sure. In that way, we will have a better price to income ratio and that will lead to a possible recovery in the housing market.

By: Norman

Norman — Tue, 20 Jan 2009 02:02:09 +0000

HI, Dr.

Since in California there are so many renters, I think we should compare the house price with “Mortgage Payers’ median income” , not the median household income and house price. Here, I assume the “mortgage payer/house owner” generally have higher income than renters. So the price/income ratio could be better than you thought.

Another point I want to make is, many second time home buyer during peak time could have a much higher down payment than you thought. Second time buyer usually sold there first house at a sinful price at peak, and put the profit as down for the new house. As far as I know, many of my friends sold first house during peak time, made at least 200 k, so their mortgage for million dollar new house is only 600 k.

Generally, I agree with you that real estate market is in big trouble now, but it might not be as bad as you thought. Let’s wait for the foreclosure number of the first quarter and see whether the Alta-A loan explode as expected.

What’s your opinion?

By: garbler

garbler — Mon, 19 Jan 2009 03:40:27 +0000

I’m looking to buy in Carlsbad 92009. Historically (since the 1980s), the median house price has been around 5 times the family median income. If you assume everybody put down 20% since the 1980s then their mortgages were 4 times their household incomes. So they’re on a budget, but it’s doable………

But in 2007 median house prices were 9 times the family median income !!!

When the prices goes back down to 5 times the income I’m buying. I may lose some of my downpayment as the pendulum swings to the extreme, but probably not by much.

By: PrintFaster

PrintFaster — Mon, 19 Jan 2009 02:44:54 +0000

Hi Doc
My view is driving directly to principal relief from the
government. Take the ideas of the jubilee, and
cancel say $100,000 or $200,000 of consumer+mortgage
debt.

Forget putting money into the hands of the middleman
banks. They just eat in bonuses and salaries. Bankrupt
the banks and cancel the loans. Let’s do a reset/reboot.
The current path is going nowhere and will result in years
of misery.