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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: MulhollandDrive who wrote (3265)	7/8/2002 5:49:34 PM
From: Jim McMannis	Read Replies (1) \| Respond to of 306849

The only way your people can qualify is based on the mortgage amount not sales price. How long have you lived in Culver city?

To: MulhollandDrive who wrote (3265)	7/8/2002 6:10:08 PM
From: GraceZ	Respond to of 306849

Its worthless in the sense of my example where the median home price is being skewed by the newer more expensive houses that are the ones selling and the median income is being determined by the combination of existing homeowners and new home buyers. The median home price selling is higher than the median income can afford in my area but it doesn't matter because the higher incomes are moving in to buy up the supply. The market gives not a fig that the median or average person in the area can't afford to buy the neighborhood they are in at the current selling price. I've lived in plenty of houses I couldn't afford to buy at current sale prices. The real estate market only cares that the marginal supply is finding marginal demand that can afford it. What always happens in these situations is that people do wind up staying put, making the supply even tighter and the subsequent prices even more ridiculous. This has occurred almost unabated in parts of California since the sixties. Every time I think prices can't get any more ridiculous there, they do. It makes a lot of people angry because they get priced further and further out of the market the longer they wait. This is what turns them into angry real estate bears or reluctant pissed off buyers. I probably spoke with the 60k couple thousands of times over ten years about buying a home in their Northern California neighborhood. They finally gave in and bought using an interest only loan (there's your adjusted mortgage standard) from the seller. I advised them strongly against it. They did it anyway and guess what? They wound up with twice the equity I had in my house after 8 years of paying a 20 year mortgage within two years and were able to get a conventional mortgage at a much lower rate with their savings and equity. By the time they got to the mortgage lender they had a history of paying the mortgage on time and so much equity to loan value that they were a good bet.