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. :-)
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