Comments on: Redefining Success: One Year of Inventory and 27 Percent Annual Drop for Southern California. Is This the Elusive Bottom? http://www.doctorhousingbubble.com/redefining-success-one-year-of-inventory-and-27-percent-annual-drop-for-southern-california-is-this-the-elusive-bottom/ How I Learned to Love Southern California and Forget the Housing Bubble Sat, 22 Nov 2008 07:46:45 +0000 http://wordpress.org/?v=2.2.2 By: Jim http://www.doctorhousingbubble.com/redefining-success-one-year-of-inventory-and-27-percent-annual-drop-for-southern-california-is-this-the-elusive-bottom/#comment-18644 Jim Fri, 20 Jun 2008 15:56:26 +0000 http://www.doctorhousingbubble.com/redefining-success-one-year-of-inventory-and-27-percent-annual-drop-for-southern-california-is-this-the-elusive-bottom/#comment-18644 Response to surfaddict: Good comeback on my comments about the faded dream. I do miss the surf and the beach. At my home overlooking the ocean in Washington State my stick sit forlornely in the back yard waiting for waves in the Puget Sound. I am glad you are enjoying your life. Response to surfaddict:
Good comeback on my comments about the faded dream. I do miss the surf and the beach. At my home overlooking the ocean in Washington State my stick sit forlornely in the back yard waiting for waves in the Puget Sound. I am glad you are enjoying your life.

]]> By: surfaddict http://www.doctorhousingbubble.com/redefining-success-one-year-of-inventory-and-27-percent-annual-drop-for-southern-california-is-this-the-elusive-bottom/#comment-18606 surfaddict Thu, 19 Jun 2008 22:20:38 +0000 http://www.doctorhousingbubble.com/redefining-success-one-year-of-inventory-and-27-percent-annual-drop-for-southern-california-is-this-the-elusive-bottom/#comment-18606 Must be nice to be in that top 5% of earners. I have eliminated any extra driving, and have fed the family hot dogs for dinner 3 times in the last 10 days. I fall in the top 20% of earners. BTW the surf was again nice today, it'd be a waste to NOT get out there since it cost SO much to live here in SoCal vs (pick about 45 other states) Must be nice to be in that top 5% of earners. I have eliminated any extra driving, and have fed the family hot dogs for dinner 3 times in the last 10 days. I fall in the top 20% of earners. BTW the surf was again nice today, it’d be a waste to NOT get out there since it cost SO much to live here in SoCal vs (pick about 45 other states)

]]> By: JimAtLaw http://www.doctorhousingbubble.com/redefining-success-one-year-of-inventory-and-27-percent-annual-drop-for-southern-california-is-this-the-elusive-bottom/#comment-18583 JimAtLaw Thu, 19 Jun 2008 15:25:12 +0000 http://www.doctorhousingbubble.com/redefining-success-one-year-of-inventory-and-27-percent-annual-drop-for-southern-california-is-this-the-elusive-bottom/#comment-18583 Ann is right, and what's more, among those of us who are actually both in this income bracket and have the 25-50k+ downpayment lying around, how many of us are willing to buy into a very rapidly depreciating market? My cash downpayment would evaporate by the end of the year if I put it into a house, at least here in SoCal! Hyperinflation is eating away at my savings very rapidly already, as by my measurements, my collective food and gas expenses have gone up by 2/3 or more since the beginning of 2007 (gas up 100%, food up 40% or more on many items I buy regularly), but not fast enough to dissolve $50k in a year! In contrast, if the projections by the banks, and the housing futures indexes are right, and housing values will drop another 30% or more over the next few years, a $700k home purchase would be $200k or more underwater by 2012! An FHA loan may get me a good rate, but not enough savings to make up for six figure depreciation - not by a long shot. No, methinks that most people who can actually afford the mortgage on a $700k house will be sitting on the sidelines for a while. Ann is right, and what’s more, among those of us who are actually both in this income bracket and have the 25-50k+ downpayment lying around, how many of us are willing to buy into a very rapidly depreciating market? My cash downpayment would evaporate by the end of the year if I put it into a house, at least here in SoCal!

Hyperinflation is eating away at my savings very rapidly already, as by my measurements, my collective food and gas expenses have gone up by 2/3 or more since the beginning of 2007 (gas up 100%, food up 40% or more on many items I buy regularly), but not fast enough to dissolve $50k in a year! In contrast, if the projections by the banks, and the housing futures indexes are right, and housing values will drop another 30% or more over the next few years, a $700k home purchase would be $200k or more underwater by 2012! An FHA loan may get me a good rate, but not enough savings to make up for six figure depreciation - not by a long shot.

No, methinks that most people who can actually afford the mortgage on a $700k house will be sitting on the sidelines for a while.

]]> By: AnnScott http://www.doctorhousingbubble.com/redefining-success-one-year-of-inventory-and-27-percent-annual-drop-for-southern-california-is-this-the-elusive-bottom/#comment-18570 AnnScott Thu, 19 Jun 2008 13:50:44 +0000 http://www.doctorhousingbubble.com/redefining-success-one-year-of-inventory-and-27-percent-annual-drop-for-southern-california-is-this-the-elusive-bottom/#comment-18570 dbal you ask about the $729K FHA limit a d state that "If there are a lot of people with solid incomes but not much money saved for a downpayment, taking advantage of the $729,000 FHA limit in 2008 would seem to be a logical choice" ***** Slow down. An FHA mortgage of $729K will support a purchase price of $751K (97% LTV.) Under the FHA underwriting rules, the Principal, Interest, Taxes, Insurance and PMI (mortgage insurance) can not exceed 31% of gross income. (Front End Debt-to-Income ratio.) That means that the qualify for a $729 mortgage with 3% down, the borrower needs an income of around $18800 a month or $225,800 a year. That puts them pretty close to being in the top 2% of all households in the US (Top 2% start at $250,000, top 1% starts at $520,000.) ****Now HOW any households are in that income bracket? *****A $500,000 FHA loan with 3% down and a purchase price of $516,000 means the borrower needs a monthly income of $12,900 or $154,800 a year. And that is in the top 5% of all households. ****Ergo changing the loan amount back to around $500K from $729K has an impact on less than 2-3% of all buyers. (And if at those income levels they do not have savings, they will probably end up in bankruptcy sooner or later from being profligates so it would probably, at most affect only 1/8 to 1/4 of those in that 2-3% which means it would only affect .025% - .075% of buyers.) dbal you ask about the $729K FHA limit a d state that “If there are a lot of people with solid incomes but not much money saved for a downpayment, taking advantage of the $729,000 FHA limit in 2008 would seem to be a logical choice”

***** Slow down. An FHA mortgage of $729K will support a purchase price of $751K (97% LTV.) Under the FHA underwriting rules, the Principal, Interest, Taxes, Insurance and PMI (mortgage insurance) can not exceed 31% of gross income. (Front End Debt-to-Income ratio.) That means that the qualify for a $729 mortgage with 3% down, the borrower needs an income of around $18800 a month or $225,800 a year. That puts them pretty close to being in the top 2% of all households in the US (Top 2% start at $250,000, top 1% starts at $520,000.)
****Now HOW any households are in that income bracket?
*****A $500,000 FHA loan with 3% down and a purchase price of $516,000 means the borrower needs a monthly income of $12,900 or $154,800 a year. And that is in the top 5% of all households.
****Ergo changing the loan amount back to around $500K from $729K has an impact on less than 2-3% of all buyers. (And if at those income levels they do not have savings, they will probably end up in bankruptcy sooner or later from being profligates so it would probably, at most affect only 1/8 to 1/4 of those in that 2-3% which means it would only affect .025% - .075% of buyers.)

]]> By: dball http://www.doctorhousingbubble.com/redefining-success-one-year-of-inventory-and-27-percent-annual-drop-for-southern-california-is-this-the-elusive-bottom/#comment-18536 dball Wed, 18 Jun 2008 22:36:46 +0000 http://www.doctorhousingbubble.com/redefining-success-one-year-of-inventory-and-27-percent-annual-drop-for-southern-california-is-this-the-elusive-bottom/#comment-18536 What do people think of the 12/31/08 deadline for the $729,000 FHA loan to revert back to the $500,000 range? If there are a lot of people with solid incomes but not much money saved for a downpayment, taking advantage of the $729,000 FHA limit in 2008 would seem to be a logical choice....once it reverts back to $500,000 or whatever it is come 1/1/09, you're limited in what you can buy. Having said that, would we not see some bump in sales and a decrease in inventory as we approach the 12/31/08 FHA deadline, or will that be more than offset by foreclosures and typical fall/winter inventory bumps? What do people think of the 12/31/08 deadline for the $729,000 FHA loan to revert back to the $500,000 range? If there are a lot of people with solid incomes but not much money saved for a downpayment, taking advantage of the $729,000 FHA limit in 2008 would seem to be a logical choice….once it reverts back to $500,000 or whatever it is come 1/1/09, you’re limited in what you can buy. Having said that, would we not see some bump in sales and a decrease in inventory as we approach the 12/31/08 FHA deadline, or will that be more than offset by foreclosures and typical fall/winter inventory bumps?

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