Comments on: Housing Prices always go up — not really

By: The Housing Bubble » Blog Archive » What if no one can afford to live there?

Sun, 03 Aug 2008 23:39:00 +0000

[...] reader, Jen, posted a comment on a previous posted titled Housing Prices always go up — not really. Her insightful comment was as follows: Very sound advice, but according to your rules, only about [...]

By: Mark Walters

Mark Walters — Thu, 26 Jun 2008 18:10:24 +0000

It makes me go “Ha, ha, ha” when I see real estate brokers advertising homes for 20% under market value. Excuse me sir, but just how do you determine “market value” in a falling market… and shouldn’t an ethical broker warn people of the situation?

By: Jen

Jen — Thu, 13 Dec 2007 07:57:55 +0000

Very sound advice, but according to your rules, only about two percent of the country can afford to live in Southern California. In Sherman Oaks, where I live, the average income is about $62,000; the average price of a home is over $500,000. Since apartments in the area rent for about $2,500 a month for a 1100sqft 2-bedroom, it’s hard not to see the appeal of paying about $3,500 in a mortgage for a home the same size. Of course, that mortgage is about 75-85 percent of a family’s income. In order to “afford” even a tiny house or studio apartment in most SoCal neighborhoods, one would have to be bringing home about $200,000 per year.

Are the rules any different for those of us living in areas where homes are often double or triple the national average? (Aside from “move somewhere else until you make your millions,” of course!)

Best,
Jen

By: adam.dada

adam.dada — Tue, 02 Oct 2007 21:03:16 +0000

Jesse: That’s why I say it’s a cap, and just one part of the other recommendations. If you can’t meet all _three_ of my recommendations, you can’t afford a home.

I’ll expound more on this in another post coming up in a few days.

By: Jesse

Jesse — Fri, 21 Sep 2007 13:04:44 +0000

So, how do you propose a family (anyone with any kind of expenses) to be able to pay 28% of gross income on a mortgage, but then basically double that amount by paying the 15 year rate instead.

Also, what advice do you have for convincing a wife that all that bonus money should be poured into a mortgage?

Personally, I think the 28% of gross is nuts (way too high).