I just read this article about housing affordability in California. The real estate industry continues to try and pump up a struggling sector with crap. They think a household income of $3525 gross a month will support a house payment of $1410 a month. How can they seriously think that is enough money. In California, you have to add in a car payment with car insurance plus rising fuel costs. Then you have gas, electric, water, and phone bills. Then you have to buy food to eat. This is assuming you have no credit card or student loan payments. This type of crap sets people up into a long term losing situation of possible foreclosure.
On top of this, first time home buyers will have to come up with $26,600 for a down payment under this scenario. Honestly, there are very few banks that are granting loans without a 20% down payment in this economy. If they do a Fannie Mae or Freddie Mac deal, there will be extra PMI costs added on to that monthly payment. In my opinion, under these conditions, banks would be just setting up future bank REOs.
LA Times:
The California Assn. of Realtors said 66% of buyers could afford an entry-level home in the Golden State in the third quarter, a slight increase from 65% in the second quarter and 64% during the third quarter of 2009.
The group bases its analysis on income data from the U.S. Census Bureau and California home prices, which it tracks. The group found that first-time buyers needed to make a minimum of $42,300 a year to qualify for home that costs $266,620.
Assuming a down payment of 10%, that would equate to monthly payments of $1,410 including taxes and insurance. For a full look at the data, click
Nicole Scherzinger
Katie Cassidy
Arielle Kebbel
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