I love the C.A.R. They provide no end of amusement. Take this recent press release.
Entry-level housing affordability reached 69 percent
Thursday, May 14, 2009
· C.A.R. First-time Buyer Housing Affordability Index stood at 69 percent in the first quarter of 2009 compared with 46 percent (revised) in the first quarter of 2008
· The median price of an entry-level home in California was $213,040 in the first quarter of 2009
· The estimated monthly payment including taxes and insurance was $1,270 in the first quarter of 2009
· The minimum household income needed to purchase an entry-level home in California in the first quarter of 2009 was $38,090
Let's do that math. $213k/$38k is a gross multiplier of 5.6. They assume a 10% down so the debt multiplier is 5.0. Whatever happened to 2.5-3 times your gross? Never mind, moving on. The $192k mortgage at prevailing rates 5% per bankrate is $1050. Taxes in California @1.3% are $230. Apparently PMI and insurance are free in CARworld™. And that $1280/mo relative to the gross monthly take home pay of $3174/mo? 40%. Am I so old that I remember 28%?