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

To: The Wharf who wrote (30707)	5/5/2005 6:19:03 PM
From: GraceZ	Read Replies (1) \| Respond to of 306849

I just keep wondering where in blazes the income is coming from to keep those prices going up. My 30 year old niece just signed a contract on a 750k house. Both she and her new husband have very decent incomes and a pile of family money to throw into the mix (grandparents on both sides just died and left them a trust). It's hard to find something that cheap where they are looking even though that would be higher end where I live. Nothing I could say, would keep her from buying a house right now. They just got married and they want to start a family. He's a RE developer who works for his family's very successful NJ commercial RE development company, they are familiar with the risks and they have the resources. The RE cycle doesn't care much about family formation. They really don't want to live in a rental. Besides rents are high in the Princeton area for anything decent. I saw the first "price reduced" sign on a newly finished house today a few miles away. Cracks are starting to show.

To: The Wharf who wrote (30707)	5/6/2005 3:06:17 AM
From: Amy J	Read Replies (2) \| Respond to of 306849

Darleen, RE: "I just keep wondering where in blazes the income is coming from to keep those prices going up." It's loose lending standards, not income. "Majority of Californians make less than half the income needed to buy a home " People buy without the proper income qualification: "The San Francisco Bay area had the highest gap in the state at $92,930, where potential homebuyers had a median household income of $67,770 but needed qualifying income of $160,700 to purchase a median-priced home at $689,240." Projecting the figures in the article to a $1.3M house, the buyer would need a household income of $303k/yr. It's not too difficult for two married people in hightech with either good degrees or good experience to earn $150k each for a total household income of $300k/year, excluding stocks. But even in that scenario, that doesn't leave too much in the way of a backup plan or adequate buffer for rainy days, unless a person wants to sell stocks if something goes wrong with their income. Wise planning assumes 50% of total household income excluding stocks, in case someone gets ill or loses a job. Maybe some people think Mom and Dad are great backup plans. news.yahoo.com Regards, Amy J