The Seemingly Endless Upward Trend
The Dallas Morning News reports from Texas. “After months of increases, the rate of Dallas-area home price gains shows signs of leveling off, according to the latest Standard & Poor’s/Case-Shiller Home Price Index. Home prices in the Dallas area have been rising on a year-to-year basis for the last 13 months in the index. Housing analysts say it’s good news that local home prices aren’t getting out of hand. ‘The really high rate of increase was probably unsustainable over time, and, in fact, you might not want it to be,’ said James Gaines, an economist with the Real Estate Center at Texas A&M University.”
“Dallas-area home prices are now only about 3 percent below where they were before the recession, according to Case-Shiller’s numbers. ‘As builders ramp up and more houses are listed, we should see the strong increase in prices slow to a more normal pace,’ said D’Ann Petersen, a business economist with the Federal Reserve Bank of Dallas. ‘The North Texas housing market remains strong, and prices are still moving in the right direction. I did expect price appreciation to ease, and it is good that we will likely not see a price bubble here.’”
CBS Dallas/Ft. Worth. “With housing inventory levels near record lows in the Dallas / Fort Worth area, many would-be home buyers are writing ‘Dear Seller’ letters to help close the deal. Monte and Jan Bennett offered the listed price on a home in Plano after it had been on the market for less than two days, but so did another potential buyer. The Bennett’s real estate agent, Brandee Wilkins with Coldwell Banker Apex, convinced the couple to draft a letter to the seller explaining who they are and why the house would be perfect for them. Wilkins said she also encourages her clients to include family pictures in their letter. The seller picked them. ‘We had to stand-out from the other offers,’ said Monte Bennett.’”
“Keller Williams Realty agent Barbara Van Poole said in the past couple months in some of the popular neighborhoods in West Plano, McKinney, and Frisco it has not been uncommon for sellers to have multiple offers after just a single day on the market. This is why she is preparing ‘Dear Seller’ letters for nearly all her clients. ‘When we have a market like this it becomes more personal,’ said Van Poole. ‘The emotional connect can really tip the scale one way or another.’”
Your Houston News. “Just how hot is the existing home market in Montgomery County these days? Hot enough that almost every sale in the county attracts multiple offers. In a number of cases, prospective buyers offer to pay the seller’s closing costs. Cindy Hamann, branch manager of Coldwell Banker United in The Woodlands, said she has never witnessed such a surge in real estate sales in Montgomery County. There’s no secret as for the seemingly endless upward trend in the housing market. ‘It’s simply supply and demand,’ Hamann said. ‘We need more inventory on the ground. The new home market has not caught up with the demand.’”
The Austin American Statesman. “The housing market is at a nine-year high for the Austin area and for those eying Pflugerville as home, snagging a new house could happen in fewer than 30 days. Pflugerville real estate agent Michelle Sheehan said investors have been buying reasonably priced property to rent because of an expected increase in home sale prices in the next seven years.”
“‘A lot of people have jumped on the investor bandwagon because they can’t earn anything on their money in the bank,’ Sheehan said.”
The Lubbock Avalanche Journal. “James Arnold, executive VP of Lubbock National Bank, said both existing home sales and new construction are running well ahead of last year’s pace. Arnold attributed a portion of the activity in the homebuying sector — in both new and existing home purchases — to Federal Reserve Board decisions to keep interest rates low. In addition, he said, lenders are willing to stretch requirements to some extent to help people qualify.”
“‘We’re continuing to see great numbers,’ Arnold said, adding he does not recall construction numbers this strong in the Lubbock market.”
The San Antonio Express-News. “David and Melina Montelongo, former co-stars of the A&E show ‘Flip This House,’ claim they can’t pay back their debts. Last week, the couple filed for Chapter 7 bankruptcy liquidation in San Antonio. They have about $31,000 in assets and owe creditors roughly $600,000, says their bankruptcy attorney, J. Todd Malaise. ‘When the economy and real estate market went south in 2008, it really caused problems with their business,’ Malaise said.”
“As the couple’s debts accumulated, David Montelongo has been locked in a legal dispute with his brother and former co-star, Armando Montelongo Jr. Another pending lawsuit involves one of Armando Montelongo Jr.’s companies, Real Estate Training International LLC. In 2012, the real estate guru sued his brother in federal court, claiming David Montelongo and his wife operated businesses that resembled his own, including real estate investment workshops and bus tours.”
“Armando Montelongo’s current training program works like this: people attend a free preview to hear about the program and then are asked to sign up for a three-day seminar, which in 2012 cost about $1,500. A VIP bus tour in place such as Southern California and mentoring for one year could run about $25,000. Armando Montelongo also sells books and other training materials on his website.”
“Last year, Armando Montelongo Co. made Inc. Magazine’s list of fastest growing private companies for the second time. David and Melina Montelongo currently work as consultants for people looking to invest in real estate. Despite their financial troubles, Malaise said, the couple will continue to work in real estate.”
The buyer should write a letter to the seller explaining just how much they want the house and they should include family pictures?
Lol. No signs of a mania here.
Usually the seller is the one who talks up the merits of whatever it is he wants to sell, now it’s the buyer who is talking doing the talking.
Unless interest rates stop rising as quickly as they recently surged, the market will flip in a heart beat.
Rising interest rates tend to add to the sense of urgency.
First there is the sense of urgency, followed by the disappointment on realizing you can ‘afford’ to pay tens of thousands of dollars less for a house than you could have ‘afforded’ to pay before interest rates spiked.
Would-be sellers are even more disappointed than the buyers on this realization.
The radio ads here have been dominated by Quicken urging underwater borrowers to refinance. Yesterday for the first time they said rates are going up and detailed how much “more house” you could buy if you acted now versus 6% in the future.
June 6, 2013, 10:46 a.m. EDT
Treasurys slip after jobless-claims data
By Ben Eisen, MarketWatch
NEW YORK (MarketWatch) — Treasury prices fell Thursday after data showed that U.S. jobless claims dropped by 11,000 last week ahead of the hotly-anticipated May employment report due on Friday.
After the claims news, the benchmark 10-year note (10_YEAR +0.67%) yield, which moves inversely to price, rose 1.5 basis points to 2.109%.
The 30-year bond (30_YEAR +0.43%) yield rose 2 basis points to 3.266 and the 5-year note (5_YEAR +1.37%) yield rose 1 basis point to 1.034%.
…
Got yield volatility?
What is most interesting is how stocks are also gaining on jobs-data jitters. How can both the stock and bond markets be right (and perpetually schizophrenic)?
June 6, 2013, 12:53 p.m. EDT
Treasurys swing to gains on jobs-data jitters
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By Ben Eisen, MarketWatch
NEW YORK (MarketWatch) — Treasury prices swung higher in a choppy Thursday session as the market waits for a key Friday jobs report that will help determine the Federal Reserve’s near-term policy outlook.
The benchmark 10-year note (10_YEAR -0.53%) yield, which moves inversely to price, was down 5 basis points to 2.042%. The 30-year bond (30_YEAR -0.28%) yield fell 4.5 basis points to 3.201% and the 5-year note (5_YEAR -0.68%) yield fell 4.5 basis points to 0.979%.
…
Check this out:
‘The mainland crackdown on fake export invoices used to disguise money flows is likely cutting national trade figures, revealing dull global demand that will weigh on economic growth. Outbound shipments likely grew 7.1 percent on-year in May, less than half the 14.7percent in April, based on the median estimate of economists ahead of data due tomorrow.’
‘Import growth probably slowed to 6.9 percent from April’s 16.8 percent. More accurate data may also highlight the need for Premier Li Keqiang to push for domestic consumption. Weak exports could also test Li’s reluctance to add stimulus to boost expansion of the world’s No 2 economy.’
“The crackdown on fake invoicing will bring the inflated export growth down to the real trend, which is single digits,” said Zhang Zhiwei, chief China economist at Nomura Holdings. “China’s economy is weakening but not collapsing.”
‘January-April growth was likely overstated by 4-13 percentage points.’
http://www.thestandard.com.hk/news_detail.asp?we_cat=2&art_id=134442&sid=39777837&con_type=1&d_str=20130607&fc=8
“China’s economy is weakening but not collapsing.”
‘January-April growth was likely overstated by 4-13 percentage points.’”
So long as most participants in the international financial economy take those growth rate statistics at face value, there is no need to panic.
“Unless interest rates stop rising as quickly as they recently surged, the market will flip in a heart beat.”
What surge?
Look at the long term chart. The 10 year yield is where it was in Oct/Nov when the recent real estate boom got its legs. And it’s 50% lower than in 2004/2005 when real estate was soaring. A 15 year mortgage can be had under 3% today. A 30 year can be had under 4%. By comparison in the “good old days” of the 90s rates were in the 7 to 9% range. Perspective, it’s what’s for breakfast.
http://finance.yahoo.com/echarts?s=^TNX+Interactive#symbol=^tnx;range=5y;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;
Bond volatility has a grim message for the market
Commentary: As the Fed hints about tapering QE, the bond market has gotten more nervous because the government’s regular bond purchases have set prices, and no one knows what the real value is.
June 6, 2013, 12:39 p.m. EDT
Bond volatility’s grim message for the market
By Jon D. Markman
Investment-grade corporate bonds, which are normally the most serene of financial instruments, have suddenly flipped out — and stocks have followed suit after a long stretch of their own drowsiness.
There is a connection in the erratic behavior of these two asset classes that normally go their own ways, and its implications could really shake up investors of all kinds the rest of the summer.
The story goes back to late May, when a friend who runs a buy-side firm’s research team told me that the MOVE Index, which is a weighted index of two-year, five-year, 10-year and 30-year Treasury bond volatility, appeared set up to shoot higher after years of calm. The MOVE is essentially the credit-market equivalent of the VIX, and thus, it tends to move higher in conjunction with a jittery move lower in bond prices.
The MOVE Index appeared to be breaking out at the same time that senior Federal Reserve officials introduced the term “tapering” to investors’ lexicon. This suggested that the Fed was using a variety of communication channels to give investors the bad news that it was ready to start winding down the asset-purchasing arm of quantitative easing.
Tapering talk has since increased dramatically via Fed governors’ public speeches and quiet press leaks. Yet rather than being just a straightforward announcement, it has opened a debate about the market clearing level of long-term “real” rates, which are nominal interest rates minus inflation.
Because the Fed has been buying so much Treasury paper the past couple of years, there is a lack of collateral at financial institutions across the Treasury yield curve. So bond volatility is rising, my source says, in part to reflect the risk that the Fed’s artificial real rates have not been allowed to seek their own “clearing” level. In this case, “clearing” means a level at which natural (non-Fed) demand and supply come into balance.
Also, he says, the stunning new volatility in bonds and typically placid bond funds has unnerved equity investors, and this has led them to want to pay less for stocks, resulting in lower price/earnings multiples. Since around 90% of the stock market gains this year have come from P/E expansion, anything that blunts multiples will have a negative effect on stocks. You could say that the more bond volatility rises, the more nervous equity investors get and the more price multiples shrink.
Thus the Fed is now caught in a Catch-22, or a spider’s web that sticks no matter where it puts its foot: Weak inflation has given U.S. central bankers the policy path toward tapering. Yet the communication of tapering is creating false starts on rising rates and an increase in inflation expectations.
…
An 18% increase in rates translates into roughly a 15% decrease in “affordability” (i.e. how much principle a mortgage-financed buyer can bring to the closing table).
And it’s a long way up from here to rates in the 7%-9% range of just a few short years ago.
Morgan Brennan, Forbes Staff
6/05/2013 @ 4:42PM |83,303 views
How Rising Mortgage Rates Could Affect The Housing Recovery
Note: This post has been updated to reflect the latest rates released by Freddie Mac on Thursday.
Mortgage interest rates are rising. In the week ending June 6, the 30-year fixed rate mortgage clocked 3.91% in its fifth consecutive weekly gain, according to Freddie Mac, after hitting its highest level in a year last week. That’s 18% higher than the 3.31% record low set in November of 2012 and almost 17% higher than the 3.35% rate logged in the beginning of May. The 15-year fixed rate broke above 3% as well, to 3.03%.
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Kiss those 3.3% mortgage rates goodbye
As 30-year fixed home loans near 4%, the chances of going back to historic lows are fading quickly.
By Jason Notte 1 hour ago
Remember last winter when buyers with sterling credit and a down payment of more than 20% could breeze their way into a 30-year fixed-rate mortgage with a 3.3% interest rate? Yeah, that’s over.
This week, the average rate on that mortgage jumped 10 percentage points to 3.91%, according to mortgage company Freddie Mac. That’s a level unseen since April 2012. And judging by the reactions of economists, it’s a rate that’s going to be a steal compared with what homebuyers will see in the near future.
Why? At least partly because some people don’t learn. When house flipping became a trend again, even though the practice helped torpedo the housing market and bring on a recession, it was only a matter of time until someone questioned why rates were still so low.
The Federal Reserve, which is spending upwards of $85 billion a month buying Treasury bills and mortgage-backed securities to keep rates down, is now considering halting that practice as soon as September, according to CNNMoney. That would mean private investors would have to make those purchases, which in turn means higher rates to attract those investors.
Also, though consumers and job hunters may not feel the economy is so steady right now, lenders feel that it has been quite a while since the recession ended and that recent improvements justify a rate increase. With the nation adding jobs by an average of 202,000 a month and both home sales and prices rising, even lukewarm news can push 30-year mortgage rates closer to 5.23%, which CNNMoney notes was a 37-year low when it first appeared in 2003. Historically, that rate averages about 5.5% or higher.
Investment property buyers and house flippers — now accounting for more than 20% of the overall housing market — aren’t the only ones using current low rates to their advantage. Those rates are also making it a lot easier for new homebuyers to get more for their money and for sellers to get prices that keep them above water.
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ft dot com
Last updated: June 4, 2013 11:59 pm
Fed ‘tapering’ fears push up US mortgage rates
By Stephen Foley and Michael Mackenzie in New York
The average rate on a US mortgage has soared above 4 per cent for the first time in more than a year, reflecting recent turmoil in the bond market and threatening to undermine the Federal Reserve’s efforts to stoke the US recovery.
The rise has outstripped even the sharp jump in rates on US Treasury debt, which took many traders by surprise in May.
Economists said the upswing in homeowner borrowing costs is one of the first significant impacts of concern in the financial markets that the Fed will taper its purchases of Treasuries and mortgage-backed securities, measures which have been holding mortgage rates at historic lows.
The daily average rate on a new 30-year mortgage, as calculated by Bankrate.com, stands at 4.1, having been as low as 3.4 per cent at the beginning of May.
The change could affect the US economy in two ways: by making new loans less affordable, it could damp the recent recovery in house prices; and it could reduce the number of Americans refinancing into cheaper mortgages, eliminating savings that have boosted consumer spending.
Keith Gumbinger, vice-president of mortgage research company HSH, said: “The rise in the rate is enough to slow down the refinancing market, as even a small bump up in rates can put homeowners on the fence.”
Refinancing applications had already begun to decrease, falling 12 per cent in the week to May 24 according to the Mortgage Bankers’ Association – the largest single-week drop this year and back to their lowest level since December 2012.
However, many Americans remain unable to refinance, regardless of rates. At the end of last year, 21.5 per cent of borrowers had negative equity in their mortgages, according to CoreLogic.
Mortgage rates have jumped faster than yields on Treasuries because mortgage-backed securities, which finance most American home loans, have fallen more heavily in price. The Fed has been buying approximately $60bn of mortgage-backed securities per month, but officials have suggested those purchases could begin to taper off soon.
The spread between 30-year mortgage rates and the benchmark 10-year Treasury has widened by 30 basis points to 190 bps in the past three weeks. The spread has previously proved controversial, with some Fed officials wondering if banks were making excessive profits on new loans.
John Lonski, chief US economist at Moody’s, says the US economy is “trying on” higher interest rates, as if in a fitting room.
“What we don’t know is if higher borrowing costs will be burdensome on a still sub-par US recovery,” he said. “House prices are up, but we still find that housing looks weak compared to where it was at the latest peak of the cycle. There is still a sense of unease with the market, because of unease over the future for employment income.”
…
They are declining today.
From the story: “It worked. The seller picked them”.
I doubt it really worked, there’s probably more to this story, like different inspection/appraisal contingencies, time to close, etc.
I can’t imagine a letter ever making a difference, unless every single other detail is exactly the same, which is usually not the case.
“It worked. The seller picked them”.
The Winner’s Curse strikes again…
“I can’t imagine a letter ever making a difference …”
In a logical world it probably wouldn’t.
If buyers and sellers are the ones who are setting prices and these buyers and sellers are making their decisions based on something other than logic then the prices they end up setting also will be based on something other than logic.
“I can’t imagine a letter ever making a difference …”
This only makes sense in a world with a huge excess of prospective buyers relative to the number of homes for sale.
“In a logical world it probably wouldn’t.”
In every group of sellers, there are bound to be a few (very few) for whom it might make a difference. So for the buyers the reasoning is probably, “it can’t hurt and we might get lucky”. Makes sense, even if the odds aren’t with you.
Would a letter from a buyer influence a seller who views his/her/their property as a a “home” vs. an “investment”?
If I were the seller, it might, depending on my financial circumstance. And as long as I were sure that it wasn’t a bunch of BS.
“The Seemingly Endless Upward Trend”
Speeding automobile, meet brick wall.
Average 30-year mortgage rate tops 4%
Julie Schmit, USA TODAY 8:11 p.m. EDT June 5, 2013
Story Highlights
* Mortgage rates are highest in more than a year, Mortgage Bankers Association says
* Applications to refinance fall 15% as a result of higher rates
* Home purchase applications slip 2%
Mortgage interest rates have broken the 4% mark for the first time in a year and may eventually cool home price gains.
Rates jumped to 4.07% last week for a 30-year-fixed rate loan, the Mortgage Bankers Association said Wednesday. That’s up from 3.59% from early May.
Economist Christopher Thornberg of Beacon Economics expects interest rates to settle between 4% and 5% next year.
…
“David and Melina Montelongo, former co-stars of the A&E show ‘Flip This House,’ claim they can’t pay back their debts. Last week, the couple filed for Chapter 7 bankruptcy liquidation in San Antonio. They have about $31,000 in assets and owe creditors roughly $600,000, says their bankruptcy attorney, J. Todd Malaise. ‘When the economy and real estate market went south in 2008, it really caused problems with their business,’ Malaise said.”
Karma is a b!tch.
“‘When the economy and real estate market went south in 2008, it really caused problems with their business,’ Malaise said.”
How appropriate to have an attorney named Malaise deliver the bad news.
$600K in debt on $31K in assets? WOW! Just WOW!
The idea that debt will make you rich is a manic absurdity.
The idea that debt will make you rich is a manic absurdity
Debt has been making corporations rich for the past three years…Look at Apple…They have 180 bil in the bank…Wanted to pay a 50 bil dividend…Borrowed the money instead of using their cash…
They have 180 bil in the bank…Wanted to pay a 50 bil dividend…Borrowed the money instead of using their cash…
============================
If everyone had 3X the amount of cash needed to purchase homes and pay for college, then I don’t think this blog would exist.
Most of that money is over seas. Apple does not want to pay taxes and bond interest is tax deductible.
Win-win.
That is how job creators create jobs.
I watched ‘Flip’ a decent amount. Entertaining. All of the flipping teams seemed to make great money on each project, but I’d already been reading here so I knew things were going to start falling apart. A couple of observations:
1) While the amount supposedly made on each flip seemed great, I suspected they were neglecting costs.
2) Most of the teams seemed too large, so the profit was split too many ways. It also meant they were tripping over each other often enough (which was one of the more entertaining parts of the show).
3) Most of the teams did little actual work themselves, getting contractors to do most of it.
4) They looked like they were living pretty high. It’d be easy to burn through the house flippin money fast.
I’d guess that most of the flippers had minimal skills other than riding the housing bubble gravy train.
Just something else for J6P to watch and say “hey, I could do that…what am I doing working here for chump change…I want some of that action”.
“David and Melina Montelongo currently work as consultants for people looking to….”
go bankrupt themselves, apparently.
This is a monumental second chance for anyone that missed the ride the first time around.
$31k in assets and $600k in debt, I’m struggling to come up with a worse resume for a consultant. I thought of Bill Buckner on how to play 1st base, but his whole career was great, so that doesn’t work. Hitler and Napoleon on how to attack Russia? Even those had a lot of initial success.
“David and Melina Montelongo, former co-stars of the A&E show ‘Flip This House,’ claim they can’t pay back their debts. Last week, the couple filed for Chapter 7 bankruptcy liquidation in San Antonio. They have about $31,000 in assets and owe creditors roughly $600,000.”
And in New York City yesterday, a husband and wife who were popular radio self-help gurus — live your lives to the fullest! — committed suicide.
http://www.nytimes.com/2013/06/06/nyregion/2-radio-show-hosts-who-preached-tenacity-kill-themselves.html?ref=nyregion&_r=0
There is a lesson here somewhere.
Too bad they didn’t release the inspirational quotes from the suicide notes.
And this happens because lots and lots of people are moving to Texas looking for jobs. The economy is so poor in other areas that even Rick Perry’s territory seems attractive to most.
—–
How to Keep Up with 158 People Moving to Austin Per Day
Two years ago, Mark Sprague, an Austin-based economist and State Director of Information Capital at Independence Title Company stated that approximately 158 people (40 families) were moving to Austin each and every day. With Austin topping countless year-end real estate, economic, and lifestyle lists in late 2012 and early 2013 (Forbes’ fastest growing cities, 2013), that number is pushing ever closer to 200. 158 people a day - at least. That means each day, Austin’s real estate industry needs to grow to support 40 additional family-sized houses, our roads need to be able to support 65 additional cars, and our economy needs to support 40 more households
When I moved to Austin in 2008, it was said that 1,000 a month were moving there. Great if you like sitting in your car or waiting in line/paying through the nose for just about everything. I couldn’t wait to get out of there. I read when putting this together that San Marcos is the fastest growing city in the US. Last time I went through SM, the developers had ruined just about every view with houses crammed in next to each other.
I couldn’t agree more. I went to New Braunfels for a funeral for the first time in 30 years and nearly gagged. Looked just like the out of control sprawl that is Austin! Where I live, I see at least 10 out of state license plates every day on my commute home. Mainly FL, CA, NJ, IL, MI and PA. Criminey!
I just cannot fathom why people flock to areas with absolutely crushing heatwaves.
“I just cannot fathom why people flock to areas with absolutely crushing heatwaves.”
They got this fancy new thing called an Air Conditioner……
Austin has crushing heatwaves for 3 months. But it’s 60 in January. That’s a pretty nice tradeoff.
Austin has crushing heatwaves for 3 months.
I lived in nearby San Antonio once. I’d say the heatwave season is more like six months. And it’s brutally humid too.
WBBR discussed housing and interest rates this morning.
If you got a house you’re planning on selling, you better get to it and do so in a hurry.
There are still plenty of new homes being built in Frisco and McKinney and tons of real estate listings.
Plano however, is now built out.
No it is not. They are currently building new single family homes on the east, west, north, and central sides, and just changed a lot of acreage from commerical to multifamily residential to the south. While also currently building over 1000 mulifamily residences in the central portion and marking another 1000 acres as urban mixed use in the central, ready for build out in the next year. While also building the tallest commercial building in Collin County next to the Frisco border. And over 4000 new urban mixed use apartments with the State Farm/KDC development in tandem with Richardson.
It’s as bubbly as they come!
Oh, and I forgot to mention all the condos and apartments in planned for downtown, where they bulldozed perfectly functional and popular buildings!
Downtown Plano is all of two blocks long.
Aren’t ever higher home prices supposed to represent “improvement”?
At least the thinking seems to be undergoing an “improvement,” as higher prices are now “worse,” not “better.”
Least affordable housing markets in U.S. are getting worse
June 6, 2013, 10:44 AM
The least affordable housing markets in the U.S. are becoming even less so.
That’s according to the latest data from Trulia, which found that prices in May climbed 16.3% on a year-over-year basis in the 10 least affordable markets, compared with the 9.5% increase shown in Trulia’s national data.
In the California markets of Orange County, Oakland and San Jose, prices surged more than 20%. In San Francisco, it takes 55% of average local monthly earnings to cover a typical mortgage payment. Compare that with hard-hit Detroit, where it takes only 8%, or the nearly as affordable 12% of Houston and Atlanta.
Here’s the full list, with percentage of monthly earnings needed to cover a mortgage payment:
Honolulu: 74%
San Francisco: 55%
Orange County, Calif.: 44%
Ventura County, Calif.: 41%
Los Angeles: 41%
San Diego: 41%
Oakland, Calif.: 37%
Long Island: 35%
New York area: 35%
San Jose: 33%
Is that a based on single income or household income? If it’s based on single income, it’s meaningless.
From the Trulia study:
“We estimated how far a typical worker’s wages to go pay the mortgage on a standard-sized home (1800 square feet) at current mortgage rates (3.8%), using local wages and local asking prices. (Keep in mind that wages are not the only source of income, and some households have more than one wage-earner while others have none. That means the actual cost-of-housing burden for a particular household may be higher or lower, but our method is designed compare affordability across metros in an apples-to-apples way.)”
So your point is taken, to a degree, as most households these days have more than one wage earner. However, if their stats are even in the ballpark, then many folks living in Honolulu or SF are severely stretched to afford housing.
Dumb question of the day:
Did the Dow Jones Industrial Average just last month realize its post-QE1, 2 and 3 peak?