Friday, December 02, 2005

Los Angeles Epicenter of Housing Bubble

Los Angelos is the epicenter of the housing bubble. Why?

Los Angeles is the least-affordable housing market in the nation, and is joined by 17 other California cities in the top 20 least-affordable places, according to the latest Housing Opportunity Index numbers released today by the National Association of Home Builders. The index, which is compiled by NAHB and Wells Fargo, is the percentage of homes purchased in the third quarter of this year that were affordable to those earning the median income. ( The Boy in The Big Housing Bubble )

The speculative episode has reached insanity. The National Home Builders Association reports that "in the nation's least affordable major housing market of Los Angeles-Long Beach-Glendale, Calif., a mere 2.4 percent of all homes sold were affordable to those earning the median income of $54,500 when the median sales price was $495,000." This assumes a down payment of 20%, solid credit, and an interest rate of 5.9% on a 30 year fixed. Affordability is at the very heart of the bubble.


It is unsustainable. The speculative episode is ending. :-)

6 comments:

  1. This comment has been removed by a blog administrator.

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  2. California is vastly overpriced. What are the reasons? Climate? Perhaps- but then again we must ask ourselves if working yourself into an early grave, is it really worth it when your overall quality of life is compromised by mega stress. Is the 'balmy weather' really worth so much of your life blood? Considering the L.A area, and just about 90% of California- is the climate worth you being a slave to a huge mortage payment for the next 30+ years of your life? Think about it. As much as I love California's climate, I long ago gave up on the aura of it all- its not really worth it in the end.

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  3. What about renting in CA?

    You do not have to buy?

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  4. David

    renting is an option- and is far better then buying a home or condo that is overpriced.
    If I was relocating to the west coast, with a job, I would not buy.

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  5. I rent a 400K condo for $1300. I am constantly getting a good laugh hearing from morons that just bought houses, I live in Los Angeles county and think the prices are hillarious, 500K for a 1200 sq ft house in the ghetto.....

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  6. Ya, you can totally get a laugh at all the people that have taken out HUGE DEBT to finance a condo for over twice what they could rent... and most of the mortgage payment for the first part will go to paying interest anyways. When the bubble really pops... that's when I'm getting in.

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